The tech industry has experienced explosive expansion for the past ten years, but now the excitement is dimming. With companies like Amazon, Alphabet, Microsoft, Salesforce, Dell, IBM, SAP, Paypal, Wayfair, and Zoom all reporting massive layoffs in 2023, the tech industry has already seen a sizable amount of job losses.
With approximately 313 tech companies implementing layoffs, January saw three of the biggest individual rounds of layoffs since the start of the COVID-19 pandemic.
Tech Layoffs in 2022-2023
As we can see, what many big tech companies have been anticipating is materializing in 2023. Everyday, more and more tech workers are being laid off within a short time span.
Lessons from the Recent Wave of Massive Big Tech Layoffs
Therefore, here are 3 takeaways from the massive layoffs from big tech companies in the US:
1. Even as heavyweights of Silicon Valley are laying off thousands of employees, companies are struggling to find and retain tech talent
“Even with the layoff climate that we’re seeing, it’s always competitive. The supply is too short for the demand,” Senior Director of TA at a software company told CBC News.
Tech talent shortage is impacting many businesses around the US due to a poor supply that has to face an enormous demand. According to Gartner, over two-thirds of IT leaders believe that a lack of skilled workers is the biggest obstacle to the adoption of emerging technology. Although enterprises’ greater reliance on technology fosters better teamwork and increases operational effectiveness, it also increases demand for IT, data, engineering, and security talent, all of which are still in short supply.
In 2027, the global market for digital transformation is expected to reach $1.5 trillion, up from $595 billion in 2022. The ongoing investment made by businesses in enterprise software, such as customer relationship management (CRM) and enterprise resource planning (ERP) systems, as well as AI and machine learning (ML) technologies, is largely responsible for this expansion. Will there be enough tech talent to support the tech industry demand? Many say ‘no’.
2. Tech continues to be a major driver of the stock market and the economy
According to the Computing Technology Industry Association, the tech sector employs almost 9 million individuals in the United States, who collectively contribute $1.8 trillion to the national economy.
Additionally, the performance of tech stocks can have an impact on the entire stock market, particularly on the Nasdaq, where technology companies account for 50% of the index.
This means that local economies and people’s investments might suffer when Big Tech takes a hit. Since Big Tech is able to weather the majority of economic shocks thanks to its enormous balance sheets and hundreds of thousands of employees, many other industries look to it as a bellwether for decisions on corporate spending, employment, and other decisions.
3. If there is no available tech talent where you are, seek elsewhere
Tech services nearshoring is gaining momentum and frequently making it to the top of company agendas. C-level executives describe it as an efficient response to the critical IT worker shortage that will make it simple to manage the extra burden. In order to overcome the IT talent crisis, businesses that select nearshore nations as an extension of their current recruiting capabilities achieve the best outcomes.
Organizations can maintain their competitiveness by employing talented personnel who live in a cheaper place but work in the same time zone. And not only that but firms have the opportunity to choose from a vast talent pool.
Mexico, for example:
- Mexico’s many universities offer excellent computer science, engineering and other technical degrees.
- Over the last 15 years, the Mexican government and cities have invested heavily in the technical education of software engineers with specialized skills in many coding languages and disciplines. As a result the talent pool in Mexico now has some of the most exceptional and experienced tech professionals in the industry.
- 1.3 million engineers in labor pool in Mexico as of 2020
- 130,00 engineers graduating every year / 90+ universities / Bi-national programs
With such a tech talent supply in a neighboring country, why keep struggling?
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ITJ is devoted to serving fast-growing and high-value market sectors, particularly the Internet of Medical Things (IoMT), working with innovative medical device companies looking to improve people’s lives. With a unique BOT (build, operate, and transfer) model that sources only the best digital talent available, ITJ enables companies in the US to create technology centers of excellence in Mexico. For more information, visit www.itj.com.