Quick look: Over 120,000 tech employees were let go in 2022, and in the first three weeks of 2023, almost 200 tech businesses cut jobs. As daunting as that may sound, there are several reasons why SMBs shouldn’t fear the recent tech layoffs. Here’s why these cuts are happening, three tips for companies to follow during this time, and how a PEO can help them navigate the ever-changing tech talent market.
Every day, there seems to be news of another round of layoffs in the tech industry. In fact, approximately 180 tech companies slashed their workforces by thousands during the first three weeks of January 2023 alone. And it’s estimated that in 2022, over 120,000 workers lost their jobs at major tech companies.
These tech layoffs are likely occurring for a couple of different reasons, including potential over-hiring following the COVID-19 pandemic and economic uncertainty. Additionally, some experts speculate “social contagion” is to blame. The APA Dictionary of Psychology defines this phenomenon as “the spread of behaviors, attitudes, and affect through crowds and other types of social aggregates from one member to another.”
As Stanford business Professor Jeffrey Pfeffer explained, “The tech industry layoffs are basically an instance of social contagion, in which companies imitate what others are doing. If you look for reasons for why companies do layoffs, the reason is that everybody else is doing it. Layoffs are the result of imitative behavior and are not particularly evidence-based.”
What should SMBs do amidst the tech layoffs?
While regularly waking up to discover that even more tech layoffs have occurred, small- and medium-sized tech companies may not only be shielded from the brunt of these layoffs but could experience consequential silver linings. Here are three things small- and medium-sized business (SMB) leaders should keep in mind as they witness tech firms cutting jobs.
Try not to stress
Many of the companies that are announcing massive layoffs are Big Tech. Smaller businesses and startups have largely maintained their workforce.
Additionally, while the number of employees being cut may sound staggering, often, it’s a small percentage of the organization’s overall workforce. For example, Google recently let go of 12,000 employees, yet it hired almost 60,000 during the last two years.
Identify recruiting opportunities
Tech layoffs are undoubtedly stressful for workers who have been let go and other companies within the industry watching from afar. However, a massive opportunity exists for SMBs to tap into the talent pool of laid-off workers, which can benefit their organizations and provide a satisfying next step for the unemployed.
Human resources (HR) industry expert Josh Bersin explains that it’s not just small tech companies that stand to benefit. Nearly every industry is undergoing a digital transformation and will require employees with tech-focused skill sets. World Economic Forum’s Future of Jobs report found that 34% of businesses plan to expand their workforce due to technology integration. Whether this talent is obtained through hiring or by reskilling or upskilling current staff, the thousands of former Big Tech employees searching for their next career move are an invaluable pool for small companies to leverage.
Don’t let your foot off the gas
While hard times do hit some companies, for many tech SMBs, there may be no need to be overly cautious despite the layoffs. Shying away from growing your organization may backfire if your competitors end up investing in and scooping up the talented workers who are currently job-hunting.
Small tech companies that are able to lean into hiring the talent they need should continue to focus on offering attractive, comprehensive benefits packages to job seekers. While layoffs may be hard to witness, organizations shouldn’t turn people off and away if they don’t have to.
Certain benefits, like mental health coverage, used to be deemed as optional perks but are now considered must-haves by employees. This comes as no surprise, as according to a recent Monster survey, over half of workers believe their well-being is more important than a salary increase. And research reveals that approximately 60% of employees rank better benefits at the top of the list when negotiating a counteroffer.
Pulling back the reins and minimizing your business’s investment in its benefits package could prompt some staff to search for greener pastures at other companies. Scaling back can also affect remaining employees through diminished productivity, morale, and opinion of the organization.
The right partner to help you navigate uncharted waters
From layoffs to mergers and acquisitions, there has been no shortage of turbulence in the market recently—and it’s not always easy for tech SMBs to decipher if and how to react to topics unfolding in the news.
- A dedicated HR Manager to advise on industry news and trends, as well as strategies to help you avoid layoffs if you do face budget decreases
- Full-cycle recruiting services (included with our PEO solution at no additional cost) that include:
- Unlimited 30-minute phone consultations with a recruiting specialist
- Sourcing for most staff-level positions
- Job advertisement creation
- Salary surveys
- Skills assessments
- Offer letter consultations
- And more
- Access to comprehensive, competitively priced benefits, including:
- Medical, dental, and vision insurance programs with flexible spending accounts (FSAs) and health savings accounts (HSAs)
- Supplemental coverage, like critical illness, accident, and hospital indemnity insurance
- 401(k) and 529 savings plans
- Employee Assistance Program (EAP)
- Cancer prevention and support program
- Pet insurance
- And more
Between seasoned HR guidance and value-added recruiting services, a PEO can help SMBs see clearly and feel confident their operations are optimized during tech layoffs and beyond.
You’re not alone when it comes to traversing the ever-changing tech industry. Contact the experts at ExtensisHR today to discover how we can help you grow and succeed.