Engineers and other tech talent hit by layoffs in big tech are migrating to companies in other sectors that need their expertise to implement digitization.
Boyden's perspectives on the news and trends that are transforming industries
Big technology firms swelled their ranks during the pandemic, going on hiring sprees to meet unprecedented demand. That trend is abruptly reversing. Customers have mostly returned to pre-pandemic norms, and in 2022, a confluence of economic factors sent tech stocks plummeting. The titans of Silicon Valley are coming down to earth, mainly in the form of massive layoffs. Most recently Microsoft and Alphabet announced that they will lay off 10,000 and 12,000 workers, respectively.
Microsoft CEO Satya Nadella said the company is cutting costs due to economic uncertainty and the desire to refocus on technologies such as artificial intelligence. Microsoft is also restructuring its hardware business. The tech giant still plans to add some $10 billion more to its investment in OpenAI and pursue its $69 billion acquisition of Activision despite regulatory challenges.
Days after Microsoft announced layoffs, Alphabet followed suit, saying it faces “a different economic reality.” These are only the latest in a series that began in November with Meta’s announcement that it will cut 11,000 jobs. Then Amazon announced 10,000 layoffs. Early in January, this climbed to over 18,000. Others in the tech sector, including Salesforce, Twitter, DoorDash and Lyft, are also cutting staff. As of this writing Apple has not joined the list, but a hiring freeze has been in effect there for months.
While technology companies are becoming leaner, those in more traditional sectors such as financial services, retail, healthcare and manufacturing are eager to add engineers and other tech talent to their payrolls. A kind of mass migration, which The New York Times called a “tech talent shift,” is underway. Skilled workers from the technology sector are finding themselves looking elsewhere just as companies in a broad swath of other sectors seek to implement digitization in their operations. Some aspire to lead their industry in the use of data and newer technologies, driving demand for technology leaders.
With digitization ramping up across industries, the majority of tech jobs are no longer in technology companies. “Nearly every company is going through this – they need tech talent,” said Lori Beer, Global Chief Information Officer at JPMorgan, adding that the bank is continuing to invest in tech skills, hiring people with expertise in cloud computing, machine learning and artificial intelligence, data science, and cybersecurity.
Clearly the companies making these hires are gaining valuable human capital, but some analysts note the potentially broader benefits of engineers and other technical talent dispersing beyond big tech companies. “If this transition redeploys skilled tech workers to other sectors of the economy, that may very well be a healthy development,” said Tim Herbert, Chief Research Officer at CompTIA, a technology education and research organization.