There used to be a certain “magic” that came with working in tech, says 30-year industry veteran John Jenkins. But that’s all over now.
The IT outsourcing professional says for much of his career, which began in the Air Force and included a stint at HP, tech workers used to enjoy a special status that put them above those in other departments. They got more competitive salaries, unmatched perks, and a heightened level of job security.
“Remember when IT was going to make a new economy, and a new way of life?” says Jenkins. “It turns out IT is just an industry, and everything that happened in manufacturing or any other sector will happen here, too. IT is not magic anymore; it’s just another component of the business.”
Reinforcing that feeling for many tech workers is a slew of recent layoffs that have brought the formerly high-flying industry back down to earth. In the past few months Meta, Twitter, Lyft, Stripe, and Salesforce have all cut staff in response to changing economic conditions.
According to Layoffs.FYI, 140,000 tech workers have lost their jobs so far this year, far outpacing 2020 and 2021, which only saw 96,000 layoffs combined. The pace of layoffs in tech is also picking up, with over 48,000 reported in November alone—four times as many as October.
“The recent layoff news from Meta, Salesforce, and Amazon shows that even the most successful tech companies are no longer immune,” says Layoffs.FYI founder Roger Lee.
A tech founder himself, Lee says he started the database in early 2020, anticipating a surge in job losses as a result of the pandemic. That expectation, however, only became a reality this summer when the higher cost of borrowing slowed the flow of investor funds into the sector, while recession fears put pressure on tech firms to cut back.
Jenkins says this fall’s layoffs have led him to realize the sector is subject to the same challenges that threaten others. While changing economic conditions are leading to cuts in a range of roles at tech companies, the trend toward outsourcing and automation is having the same negative effect on the IT job market, he believes.
“The ones being displaced by automation—often the older workers—look exactly like the factory worker that lost his job, only they’ve been paid a lot more money,” he says. “Look at other industry trends, compress it by ten to 15 years, that’s what’s going to happen to IT.”
The Most Vulnerable Tech Roles
Just as IT-specific jobs are starting to disappear, so are other roles in tech.
According to Lee’s database there are two departments that are seeing cuts at a disproportionate rate within the industry: Sales, and recruiting or human resources. “Sales is the most common role, accounting for 20% of the laid-off tech workers,” he says. “Recruiting and HR are the functions most disproportionately affected relative to their size; it’s becoming quite common for companies to lay off 50% or more of their talent teams.”
Those findings are consistent with data provided by ZipRecruiter, which also found recruiters, HR, marketing, and sales professionals were disproportionately affected by cuts.
“They’re laying off people and trying to reduce their headcount, which means they’re also not planning to hire en masse in the near future, so they are likely to do layoffs in the recruiting and HR department,” says ZipRecruiter‘s lead economist Sinem Buber. “Marketing is also always more likely to see layoffs during recessions compared to departments that are revenue-generating.”
Furthermore, just as tech companies are known for being aggressive when business is booming, Buber says they can be even more ruthless in their cost-cutting measures when times are tough. “They expanded too fast, and are unable to maintain those payrolls right now,” she says. “When their revenues go down 1% to 5%, tech companies are likely to lay-off 10% to 20%, so it’s not proportional.”
Just as cuts are rarely spread evenly across departments, ZipRecruiter also found that they tend to disproportionately affect those of certain seniority levels. Specifically, Buber says employees at the far ends of the tenure spectrum—recent hires and those who have been with the company a long time—are generally first on the chopping block during periods of belt-tightening.
The most recent hires are typically first to be let go in a trend called the “last-in, first-out” principal because they typically aren’t as established, productive, or as loyal as colleagues with more tenure. Buber says companies often want to reward their more loyal staff members and protect institutional knowledge by shielding them from cuts. At the same time, there is such a thing as too much tenure, as the longest serving staff members tend to command the highest salaries.
“They might not be their best performers, but because they have high tenure they are likely to be overcompensated; they are likely to have a bigger paycheck than someone who does the same job with less tenure,” she says. “Companies will be looking to purge these overcompensated people during this period.”
The sweet spot for job security, according to Buber, is generally between two to seven years with the company, but not always. “It depends on the learning curve,” she says.
Buber explains that some roles utilize more transferable skills, meaning that new hires might be better equipped to produce results quickly, thanks to similar experience in prior roles. Others, however, are highly complex or highly specific to that employer, meaning that new hires will take longer to get up to speed, no matter their prior experience.
Laid-off tech workers can expect a soft landing
Despite the number of recent layoffs, research shows that tech workers are relatively likely to land on their feet, and quickly.
According to a study conducted by ZipRecruiter, 37% of laid off tech workers are back to work in under a month, and another 42% find another job within three. In fact, only 5% are out of work for longer than six months. According to Buber, that is because tech skills are both highly sought after and highly transferable, meaning a slowdown in Silicon Valley frees up talent for tech roles in nontech sectors like healthcare, finance, retail, or manufacturing.
Furthermore, while tech jobs may be lacking in some of the “magic” that Jenkins described, the main reason why the industry no longer stands head and shoulders above the rest isn’t because it’s pulled back, but rather that others have caught up. In other words, laid-off tech workers who switch industries often continue to enjoy similar perks, salaries, and amounts of flexibility.
“That treatment is not exclusive to Silicon Valley workers anymore,” she says. “There are still magical and great opportunities for tech talent, but not necessarily just within the tech industry.”
Recognize your brand’s excellence by applying to this year’s Brands That Matter Awards before the early-rate deadline, May 3.
