If you’re a data engineer or software developer located in the San Francisco region, there’s an off-chance you’ve had a rough couple of weeks. In the past few weeks, all of Silicon Valley’s major tech companies ended up in the news for firing techies. So much so that the website designated to tracking layoffs in the tech industry, found approximately 85,000 lay-offs across 256 tech companies in just Q1 alone.
Overhiring or… something else?
Google leads the list with 12,000 laid off employees, while Meta (11,000), Amazon and Microsoft (both 10000) are in striking distance of first place. According to layoffs.fyi, Q1 of 2023 is already proving to be the largest single quarter of layoffs since the site began tracking them in 2020.
“To match and fuel that growth, we hired for a different economic reality than the one we face today.”
The question beckons: why are these tech companies firing their techies at such velocity? After all, aren’t techies the ones that are hardest to find? Aren’t techies the toughest fill? “Over the past two years we’ve seen periods of dramatic growth”, Google boss Sundar Pichai said in an email announcing the layoffs. “To match and fuel that growth, we hired for a different economic reality than the one we face today.”
Did Apple cause the layoffs?
In large part, Google cited the company’s core digital ad business’ turndown and recession fears — which caused the layoffs. Instead, Google will refocus its core business as well as invest early in artificial intelligence. “These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities”, Pichai said.
Zuckerberg: “Unfortunately, this did not play out the way I expected.”
Similarly, Meta and Zuckerberg cited disappointment at the lack of digital acceleration. “At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth”, Zuckerberg wrote in an e-mail. “Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”
In November 2022, Apple introduced a new privacy feature: App Tracking Transparency (ATT), which makes it harder for app-makers and advertisers to track user behaviour.
A change in Apple’s privacy features may have caused the disappointed ad returns — and the subsequent need for layoffs. In November 2022, Apple introduced a new privacy feature: App Tracking Transparency (ATT), which makes it harder for app-makers and advertisers to track user behaviour. It meant that social media platforms like Facebook, Twitter, TikTok, and others are now losing revenue, due to the stronger privacy wall that reduces their ability to collect data on users for personalised advertising.
Some perspective…
Since the beginning of the pandemic, most tech companies have largely enjoyed hiring sprees. Amazon, in particular, managed to grow its headcount by nearly three quarters of a million. According to a Yahoo! Finance graph, some perspective is clearly needed on the overhiring front. Because companies have simply overhired — and grown its headcount by large numbers.
Perspective. pic.twitter.com/UUKdzdLbCX
— Joel Cheesman 🧀 (@joelcheesman) February 12, 2023
Back to Europe
Meanwhile, on European shores, the same thing seems to be happening. In the Netherlands, Phillips laid off 10,000 people in the past three months — while Booking also fired 4,375 people, which represents 25% of its global employee base. German enterprise software firm SAP also cut 3,000 jobs, while OLX Group cut 1,500 jobs. In other words: this trend isn’t solely a US trend.
On average, 4.5% of every job is an ICT specialist.
In fact, could Europe’s — and indeed the world’s — tech market finally be in decline? The number of ICT specialists in the EU has grown by 50.5% from 2012 to 2021, almost 8 times as high as the increase (6.3%) for total employment. On average, 4.5% of every job is an ICT specialist. ICT specialists are defined as persons who have the ability to develop, operate and maintain ICT systems and for whom ICTs constitute the main part of their job.
The European Commission set the 2030 target at a population of 20 million ICT Specialists.
In Sweden, the total is a continent-high 8%, while Finland (7.5%), Luxembourg (6.7%) and the Netherlands (6.7%) aren’t far behind. The European Commission set the 2030 target at a population of 20 million ICT Specialists, which would mean an 11 million increase compared to the 2021 statistics. So the need is clear, yet most recruitment-related reports say the same: the IT talent is scarce.
Are IT specialists scarce?
PwC reports that executives have been voicing their concerns over the lack of tech skills for over a decade, going from 56% in 2011 to a whopping 79% in 2019. So, just how hard is it to find these techies to come and work for you? Data from Intelligence Group’s (IG) Giant shows that programmers, for example, are a tough get on average in many of Europe’s labour markets in pretty much every country.
On average, programmers are very difficult to recruit.
IG’s dashboard shows that even in countries with plenty of IT people, the job market activity for a programmer lies at 12% in Finland. At 17% in France. 5% in the Netherlands. And 13% in Germany. And at 23% in the United Kingdom. When taking job market activity, job changes and approach frequency into account, on average, programmers are very difficult to recruit.
France has the least relative IT vacancies
But as usually the case for labour market trends, the truth lies in the vacancies. So we asked another Dutch company, Textkernel, to delve into the total number of IT vacancies for some of Europe’s biggest markets: France, Germany, the Netherlands and the UK — and then compare that to the overall number of vacancies. “That number best shows if there’s been any relative change”, Ton Sluiter of Textkernel says.
According to Sluiter and Textkernel’s analysis, the total number of IT vacancies is indeed cooling off slightly across European markets. The UK’s numbers show a 10% decrease in IT jobs in Q4 of 2022 compared to a year earlier. France’s numbers are up, but clearly not rising as hard as they had been since early 2021 (+11% in Q4, 2022 compared to Q4 2021). While the Netherlands’ numbers also have stagnated slightly (+3% in Q4, 2022 compared to Q4 2021).
Of all vacancies in Germany, renowned for its continent-leading number of open vacancies, 10% are IT related.
Germany is best off with a net positive percentage of 36% in Q4, 2022 compared to Q4 2021. Of all vacancies in Germany, renowned for its continent-leading number of open vacancies, 10% are IT related. In the United Kingdom, the number lies at 9%, while in the Netherlands it is 7%. France has the least relative number of IT vacancies, with 6%.
‘A blip in the market’
Looking forward to 2023, the need for IT will likely remain. “Every company needs IT personnel”, Sluiter argues. “We expect the growth that we’ve seen to continue its course. There may be a blip in the market due to overhiring, but it is just that: a blip. That is particularly true when you look at the development overtime of the total number of IT vacancies. Throughout most of Western Europe, they’ve remained steady. That tells me we can’t really read too much into the current layoffs that are currently happening in the tech industry.”
Could ChatGPT be a game-changer for the IT industry?
While at this rate, Europe will likely struggle to meet its 2023 goals — it would be hard to call the market one that is ‘in decline’, based on the current Textkernel data. The landscape of those that code and develop tech could soon change, however. “I think everyone’s looking at ChatGPT as something that could help with writing”, Sluiter says. “But there’s about 30 useful solutions within it that I view as game-changers moving forward.”
“Since the mid-18th and 19th centuries, we’ve had endless arguments over whether people could be replaced by tech. I just don’t see it happening.”
Sluiter points at coding and developing as two major examples of things that could potentially be done easier and quicker with OpenAI’s newest toy. “That won’t mean it will replace those working within IT — I just see it as something that could help them do their jobs quicker and more efficiently. Since the mid-18th and 19th centuries, we’ve had endless arguments over whether people could be replaced by tech. I just don’t see it happening.”
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