Layoffs effect: Non-tech jobs gain an advantage, and startups lose shine in 2023
The beginning of 2023 has been illuminating. The phrase “The Great Resignation” has been replaced by “The Great Layoff,” while the words “Quiet Quitting” has become “Quiet Firing.” According to information gathered by Moneycontrol, nearly 2,100 employees were let go by 14 companies in India in the first three weeks of 2023. Let’s know the layoffs effect on the consumers and the sector.
Formerly regarded as havens for stable employment, Meta, Google, and Microsoft have recently joined the list of businesses engaging in massive layoffs. Layoffs have already surpassed 2023’s first three-week average from a year ago. Three things have happened due to the recent development: startups are no longer everyone’s first option for starting their careers, and the tech sector has lost some of its lustrs regarding talent demand.
The dominance of the IT industry declines
Over the past three months, the Information Technology (IT) sector’s decline in demand for talent has been the single most significant change in the job market. Xpheno, a specialised employment firm, has collated data showing that the IT Sector’s share of all active postings has been below 50% since October 2022.
Anil Ethanur, the co-founder of Xpheno, told Moneycontrol that this is a “major shift for a sector that has previously held dominance with more than 80% contribution to active job postings.” The tech industry is currently contributing between 46% and 48% of all white-collar job postings, which means it is losing ground.
The demand for non-tech products has increased during the past three quarters, which is a connected change. According to Xpheno’s data, industries like Banking, Financial Services and Insurance (BFSI), Consulting and Professional Services, Education, Media and Advertising, Manufacturing, Health and Wellness, Infrastructure, and Telecom remain open positions and offset the decline in the Tech sector’s employment.
By adding more vacant positions, other industries, including retail, goods and logistics, business process outsourcing, consumer services, and automotive, continue to participate. According to Vijay Sivaram, CEO of Quess IT Staffing, the active need for IT workers is predicted to increase by up to 20% in non-tech sectors like BFSI, Retail, and Automotive in 2023.
According to professional services business Aon, the demand for tech expertise is declining, reversing the conventional practice where non-tech firms had to pay more to hire IT personnel.
No longer favouring employment in the primary sector.
The tech industry has recently changed, moving from an employee-driven to an employer-driven market. Applications from product businesses have increased by roughly 40% in the Global Capability Centre (GCC) sector, particularly for junior posts. Fortune 500 organisations work with Talent500 as a partner in talent acquisition.
Job seekers are willing to work in any industry as long as it matches their talents, according to TeamLease Digital, which specialises in staffing across IT and IT-enabled Services. In the next four years, the non-tech industry will reportedly hire 1 million workers, at least half of whom will be employed in tech-related positions.
“While there has been an increase in hiring in the non-tech sector, the volumes hired in IT are not reflected in the data. According to Sunil C, CEO of TeamLease Digital, “there is undoubtedly some talent moving to the non-tech sector but managing tech roles.”
Startups no longer have fans to follow them.
Talent experts claim that the “body language of recruitment dialogues” has altered in the employer’s favour due to stricter screening and wage negotiations. According to Ethanur of Xpheno, the days of extravagant offer rises and extraordinary joining bonuses are long gone. The candidates’ thinking has undergone an “obvious shift,” according to Vikram Ahuja, co-founder and CEO of Talent500, as they search for more secure employment with bigger businesses.
Over 2,100 new hires are let go in the first three weeks of 2023.
For more than ten years, great talent has been drawn to startups, but now, according to Ahuja, the pendulum is swinging the other way. According to Sunil C of TeamLease Digital, job searchers are picky and decide on startup positions based on the financial condition of the companies, where they are in their careers and the type of remuneration on offer.
Where do laid-off workers go?
Xpheno had knowledge of and access to talent during the early phases of the pandemic that had been identified as COVID-related layoffs. This made it possible to follow the movements of talent who had been fired.
Ethanur claimed that the present layoffs are almost being considered as “Business as Usual” and that it is difficult to identify the talent pool of the laid-off employees separately. However, one finding in the computer industry is that businesses offering IT services have been feeding off of each other’s attrition. He continued, “The high attrition levels at a sector level, along with the small net staff gains, suggest to a mutual interchange of talent within the industry.
Talent500 has observed that many laid-off workers have started working for multinational corporations with remote teams because they can be based in India and conduct business all over the world. For multinational corporations establishing their technological centres in locations such as Bangalore, Hyderabad, Pune, etc., Ahuja remarked, “We continue to hire at the same rate.”
So, what exactly is the impetus behind the layoffs?
Reduced advertising budgets and revenues signalled a larger problem. Most startups in the technology industry rely heavily on advertising revenue. Therefore, hiring new employees was a good investment as long as the revenue stream was strong (which was particularly true in the years prior to COVID).
Advertising revenue plummeted last year, in part due to concerns of a worldwide slowdown brought on by a pandemic, making layoffs inevitable. Apple is the one notable exception. It has hired few new individuals recently, so there’s no pressing need to lay off workers (but it hasn’t been immune to job losses due to shifts in the way telecommuting is handled).
How does it affect consumers?
While the news of layoffs may shock readers, they won’t feel the effects in their wallets. In the realm of consumer technology, advancements are continually being produced. Even Twitter is trying to diversify its revenue streams, despite widespread expectations that it would have vanished by now.
Mark Zuckerberg’s Metaverse is one of those side projects that won’t go as far as its developers had hoped. Consider the recent round of layoffs that have been concentrated (notably at Amazon, Microsoft, and Meta) on these high-stakes wagers on future technological development made by company executives.
Low financing rates and increasing COVID-related consumption throughout recent years have given business leaders the confidence to invest in cutting-edge products. Except for AI, that investment is currently declining or nonexistent.
What does this signify for the sector?
As the need for skilled computer professionals rises again, it is expected that wages will fall and that more education and experience will be needed to find work in the field. Maybe the market’s ups and downs show that it’s finally catching up to more mature sub-industries. Even while the latest layoffs are notable, they won’t have much of an effect on the economy as a whole. Even if the big tech companies laid off 100,000 people, that would be a fraction of the total employment in the tech sector.
Although the stated amounts might look large at first glance, they are rarely compared to the total cost of salaries or the complete number of employees. They are only a tiny percentage of the massive influx of new employees that some tech firms initially experienced due to the epidemic. Big Tech continues to be a significant employer and will have a lasting influence on many facets of our lives.
edited and proofread by nikita sharma
