The phrase ‘tech layoffs’ might make your stomach drop – but so might the ‘Great Resignation’. Whichever side you’re coming from, you can’t deny there’s been a mass restructuring in the tech industry in 2022 and the dust hasn’t settled yet. In the past months, Cazoo has laid off 15% of their workforce, Klarna 10% and Hopin 12%. On the other hand, researchers at Gartner found just 29% of IT workers intend on remaining in their jobs, a staggeringly low statistic, whilst quiet quitting is on the rise. This upheaval is predicted to continue into 2023, especially with the cost-of-living crisis ramping up, but it’s important to get some perspective on this – whether you are an employer or employee.

Firstly, why are tech layoffs and the Great Resignation happening?

Over the past year, tech giants in the UK have had spates of mass layoffs and hiring freezes amongst rising inflation and interest rates. This has led to a pretty unstable job market. On the other hand, some big tech firms have asserted the Great Resignation has become the Great Regret – but this isn’t true. Post-pandemic, work-life balance holds an unprecedented place of importance in employee’s lives and people are desperately seeking meaning and purpose in their career. We’ve witnessed a shift towards the social normalisation of frequent job movement as people attempt to find a role which fulfils them in a way that isn’t purely financial. People are looking for more.

So how can it be good for you as a founder?

Tech layoffs and hiring freezes allow startups and scaleups to snatch up talent they previously wouldn’t have had access to – and of course this in itself sounds like a dream, but take a breath first. It is important to cultivate a well-defined strategy at this moment to avoid making hasty hires which won’t work out in the long run. In general startups and scaleups have been hindered by being unable to compete on salaries and this has forced them to develop other methods of attracting and retaining talent. Now is a great moment to take advantage of trends in the market using these tactics.

A high percentage of the candidates being let go from tech giants will have key skills startups need, but it’s important to find the best-suited candidates. A good place to start is locating lists of employees let go (Klarna posted theirs online) or reaching into your network. From there, seek out workers who have an entrepreneurial mindset and are also happy to accept share options or other equity as part of their compensation package. Companies like Klarna have seen their value slashed by 85%, meaning employee’s equity options have plummeted in value. Whilst early-stage businesses may still find funding challenging, they are more unlikely to have such valuation downsides. This is an advantage you hold over tech giants – make the most of it.

Since COVID, the movement towards meaningful work also means that startups have a moral advantage in the job market. Those people looking for employment with purpose often find their aspirations feel at home in startup culture where innovation and collaboration is king. Make sure you are placing candidates into the right roles where they can have a tangible impact and make the most of startup life.

Of course, it’s always worth being wary of those who simply need a job post-layoff versus ones that are keen to commit to what you’re building. A good way to filter through these candidates is to ask them how they’ll decide which role to choose if they get multiple offers. This answer will typically give you a much greater insight into what they’re actually looking for.

Another concern about hiring from big tech could be that they will have a different work mentality and approach than the startup one. This is a tricky one, because it’s always going to present a risk, but it’s an opportunity to test your recruiting, onboarding and training strategies. As always, it’s about having robust hiring and training processes that allow you to pick the best talent and then mould them to fit your company.

How can it be good for you as a candidate looking for work in the tech industry?

You might have been part of ‘the Great Resignation’ or you might have fallen victim to job cuts in recent years. Whether it was a purposeful decision or out of your hands, there can be a lot of upsides to the situation and it’s important to have some perspective.

Firstly, if you’re highly trained and have a wealth of experience (or even if you have the basics, but a lot of potential for growth and development) the recent trends in the tech market have given you bargaining power. You are now in demand, and this means you have some more breathing room on finding the right fit for you. While the cost-of-living crisis is still generating pressure on the general public finding higher salaries, the climate in the tech sector allows you to make some careful decisions and weigh up your options more equitably.

Whilst many people joined tech firms to make a splash at a pioneering venture, the reality of being a cog in the machine with very little creative autonomy isn’t exactly the dream. During this Great Reshuffle, finding a meaningful role at a smaller company might end up being the ideal outcome. Often these startups or scaleup roles are a much better match for their career aspirations and their tech skills will be much more highly valued at small SMEs.  

If you’re a founder with any questions about hiring practises, take our scorecard here to receive some actionable tips on building the perfect team, tailored to you – or alternatively get in contact with our co-founder and CEO Alan Furley on LinkedIn to have a chat.

If you’re a candidate looking for work, head to our Jobs Board to find the perfect role for you.