As recently as last month, news outlets across the country were still covering the Great Resignation—the unprecedented shift in turnover that saw employees leaving their jobs in droves in search of better positions. Yet in light of the recent tech-stock selloff and economic downturn, it looks like the tech industry’s insatiable appetite for new talent is slowing among certain industries. This is being touted as the Great Reset.
Over the last few years, enthusiastic tech founders were able to take advantage of an unusual period in history where the market was flush with capital from overzealous investors and government-backed stimulus. Those founders are now waking up to a new reality and discovering that the money they raised is being burned at an unsustainable pace. Companies are making difficult decisions as a result, including a wave of layoffs across the tech industry. Other companies, including Meta, are instituting hiring freezes, which have halted recruitment for some specific teams and roles.
With market dynamics changing quickly, what should employers and employees alike do to make sure they aren’t left behind?
RETURN TO SOME NORMALCY
The Great Resignation was largely driven by a rare shift in supply and demand: there simply weren’t enough talented employees to meet the needs of rapidly growing enterprises, putting job seekers in the enviable position of being able to carefully choose their next opportunity. However, the sudden wave of layoffs and hiring freezes indicates that there may be a balancing of scales in the market and a return to some normalcy.
But is this sudden shift in market dynamics a blip on the radar, or is it the first stage in a long-term correction? No one can claim to know for sure, but it’s important to acknowledge the differences between this freeze in hiring and the one that took place in March 2020.
The pandemic brought about a burst in caution, which was quickly resolved through government programs like the Paycheck Protection Program for small businesses. Without the existential threat of a global health crisis, we’re far less likely to see the type of fiscal intervention that could save free-spending tech companies. And with the government simultaneously seeking to fight inflation, we’re bound to see less liquidity in the market.
Despite the quick reactions of some tech companies, there’s no need to panic yet with regard to overall market forces. History shows that valuations in the private market tend to follow comparable companies in the public market, and the recent stock selloff should encourage private companies to pivot toward agility and efficiency. Those companies that already had a “rainy-day” plan or conservative spending should be able to navigate quickly out of this economic uncertainty.
As businesses focus on capital efficiency, they can take solace in the fact that they won’t need to spend as much on recruiting and onboarding new talent. Employees are likely to remain in a stable situation instead of taking a gamble on an uncertain hiring market. The costs of retaining an employee are significantly lower than the costs of hiring a new employee, meaning that companies will be able to enjoy an immediate lifeline as they seek to streamline their operations.
THE NEAR FUTURE OF WORK
The new hiring market could serve to level the playing field for small- and medium-sized businesses that previously struggled to compete with their larger competitors. In an employee-friendly job market, large enterprises can bully smaller competitors by wowing candidates with expansive benefits packages. But with organizations of all sizes now looking to cut costs, SMBs may be able to gain ground by offering flexibility.
Even in a newly tight job market, candidates are unlikely to give up on the privileges they came to enjoy during the pandemic—chief among them being improved work-life balance, flexible working hours and the ability to work from home. SMBs that are able to deliver these options while maintaining shrewd finances should be able to weather the storm and bring on new talent.
For candidates, the onslaught of hiring freezes may be a reason to get more creative in the job search. If the past two years proved the viability of remote work, job seekers should expand their search globally to include markets where hiring shows no signs of slowing. Growing companies in emerging markets like India will likely continue their rapid expansion, and they may be able to offer surprisingly competitive compensation as they gain ground on their Western competitors.
Times of crisis have a habit of revealing those who maintained good habits and those who are scrambling to get their house in order. For employers and employees alike, the keys to surviving economic turmoil are simple: remain calm, develop a plan and be creative when searching for new opportunities.
A developer at heart who believes in the skill-first approach to hiring, Sachin is the CEO and Founder of HackerEarth.