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tech market recovery

How the Job Market Recovered After the Tech Layoffs—An Inside Look at Tech Hiring, Generative AI, and More

10 minute read | November 7, 2023
Kindra Cooper

Written by:
Kindra Cooper

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After shedding nearly 250,000 workers, the tech industry appears to be recovering from the mass tech layoffs in 2022 and 2023, albeit slowly. Job cuts peaked in January, with over 108,000 tech employees receiving pink slips. By contrast, less than 15,000 tech professionals were laid off in September. 

For now, at least, the smoke is clearing as Big Tech finishes course-correcting in the aftermath of the pandemic, when companies overhired from overestimating demand for online services like streaming, food delivery, and video conferencing tools.

Post-pandemic hiring slowdowns and rising interest rates designed to curb record inflation meant tech giants saw their valuations shrivel, creating pressure from investors to abort non-business-critical endeavors like R&D projects and drop headcount. For example, Meta reduced support for NFTs on Instagram and Facebook, while Amazon shuttered its primary care service, Amazon Care, due to a lack of customers. 

Revenue per employee, one of the basic measures of company efficiency and productivity, fell at Amazon, Meta, and Twitter from 2018-2022 by 6.9%, 14%, and 18.2%, respectively. 

Revenue per employee fell at Big Tech companies from 2018-2022

“This is happening even as people claim that generative AI tools are causing huge productivity gains,” says Nathan Brunner, founder, and CEO of Salarship. “What’s causing it is an overall loss in revenue.”

As a tumultuous year in tech comes to a close, we wanted to give current and prospective Springboarders insight into where the tech job market is headed next, especially given recent developments in generative AI. 

Tech Layoffs: A Brief History

Big Tech took a major beating throughout the year. Meta laid off 11,000 employees in November 2022, and another 10,000 in March, effectively shedding a quarter of its workforce. Dropbox discharged 16% of its staff, and Microsoft shrunk its workforce by 10,000 workers. Amazon offloaded 27,000 workers in the past year. 

Nevertheless, the lion’s share of job cuts affected recruiters, marketers, middle managers, and support staff more than actual techies (i.e., programmers, data scientists, UX designers, etc.). Of all tech-industry workers affected by layoffs, only 22% were software engineers. Most job cuts (28%) hit professionals working in HR and talent sourcing. Marketing employees followed (7.1%), then customer service (4.6%), PR, communications, and strategy (4.4%). At Microsoft and Meta, UX design represented 3.5% and 4.3% of job cuts, respectively.

Unfortunately, mass layoffs have been normal for a very long time. Excessive inflation in 2022 (9.1% compared to a typical annual rate of 2%) softened consumer spending, forcing businesses to make cutbacks. Employee payroll represents the biggest expense for most businesses; hence, employees tend to become immediate casualties at the first sign of a downturn. 

“The idea that you would have job security is sort of a 20th-century invention,” Louis Hyman, a historian at Cornell University, told Vox in an interview. 

One 2019 study by HR tech platform CareerArc found that 40% of respondents said they had been laid off at least once. 

“There is no such thing as job security unless you have your own company, and even then, the company can get so big that the board votes you out—like what happened to Steve Jobs,” says Maria Tomaino, a career coach at Springboard. “A smart choice is for Springboard students to have their own LLC for contract work. Always aim to diversify your income with projects, freelancing, and other opportunities.”

Growth In Tech Occupations Remains Strong, Despite Layoffs

While layoffs at FAANG companies (Facebook; Apple; Amazon; Netflix; and Google) courted the most publicity, given their sheer market dominance, the tech job market remains strong. However, the most in-demand positions may have migrated outside Silicon Valley. In a recent BCG survey, 40% of laid-off tech workers had found new startup jobs. Many former Big Tech staffers find greater satisfaction in less corporate roles with reduced red tape and the ability to work remotely. Small companies are twice as likely to hire full-time remote workers, according to a State of Remote Work report by Owl Labs, to save money on office space. 

Former techies are being scooped up by firms in other sectors, keeping the job market strong. CompTIA predicted net tech employment would reach 9.4 million in 2023, representing a 3.4% increase from the prior year. Over the next 10 years, the number of job postings will continue to outweigh layoffs. The replacement rate for tech occupations during 2023-2033 is expected to average 7% annually. 

According to CompTIA’s State of the Tech Workforce Report, these are the top projected growth occupations for the next 10 years:

  • Data scientists and data analysts (226%)
  • Cybersecurity analysts and engineers (242%)
  • Software developers and engineers (180%)
  • Web designers and UI/UX (164%)
  • Web developers (159%)
  • Software QA and testers (132%)
  • CIOs and IT directors (99%)
  • Database architects (49%)
  • Systems analysts and engineers (39%)
  • Network support specialists (22%)
  • IT support specialists (21%)

Ex-Big Tech Employees Are Doing Well In Other Industries 

While job postings are less concentrated at Big Tech, opportunities have sprung up in small- and medium-sized companies, nonprofits—and even state and federal governments. USAJOBS, the official job portal for the U.S. federal government, currently lists over 700 unfilled IT positions. Sectors like finance, banking, and defense contracting are sweeping up former employees from Meta, Twitter, Salesforce, and other tech companies. 

“Working for a smaller company does not necessarily mean earning less money or having less job security than at a bigger company,” says Tomaino. “That’s a myth.” 

Image credit: BCG, The Race for Tech Talent Hasn’t Stopped

A BCG survey found that 9 out of 10 tech workers who’d been laid off had found work again. Of those with new positions, 94% remained in the tech industry. At the same time, an impressive 90% of laid-off H1-B visa holders had found new jobs that met the program’s rigid requirements, allowing them to remain in the U.S. Foreign workers must find work directly related to their educational background within 60 days or face deportation. 

The U.S. federal government made a push to hire 22,000 tech workers in FY 2023. “Tech to Gov” job forums hosted by federal agencies have partly targeted laid-off workers. Tech job postings for federal, state, and local government soared 48% in the first three months of 2023 compared to last year. 

The Generative AI Boom Is Actually Boosting The Tech Industry 

AI’s share of US startup funding doubled in 2023 as investors sought to cash in on the generative AI craze fueled by the launch of OpenAI’s GPT-3 in November 2022. Gartner predicts that the AI software market will reach nearly $134.8 billion by 2025. 

A spate of AI startups this year offer services such as AI video generation, data analytics, code completion, and language translation. 

“Basically, if you put the word ‘AI’ in your startup pitch, investors will pour money into it,” says Brunner. “There are so many emerging AI companies focused on automated resume writing and generating cover letter templates.” 

ChatGPT and other generative AI technologies are bolstering demand for tech workers after a year of mass layoffs at BIg Tech

Even non-AI companies are trying to integrate AI into their daily operations. On LinkedIn, the number of global English-language job postings that mention AI technologies is up 21 times from November 2022, when ChatGPT launched, a LinkedIn spokesperson said in an email to Insider. 

This phenomenon has boosted demand for engineers and AI specialists, giving rise to new-fangled job titles like “AI prompt engineer” and “AI research scientist.” Over the summer, Netflix reportedly sought to fill an AI-focused product manager role on its Machine Learning Platform (MLP), offering a salary of up to $900k. 

While emerging technologies typically promise net job creation, job loss remains inevitable. According to the World Economic Forum’s Future of Jobs Report 2023, 49% of executives surveyed anticipate that widespread AI adoption will catalyze job creation, while 23% expect it to displace jobs. Job displacement is not the same as job elimination; rather, it marks a shift in the skillsets employers require. 

AI skills like natural language processing (NLP), image processing, and model tuning are the top technical skills companies are looking for, according to UpWork. Knowledge of machine learning libraries and frameworks, including Pytorch, Stable Diffusion, and TensorFlow, is also essential. 

In a survey by Microsoft partner Avanade, 64% of customers felt they were more likely to employ more humans next year even as AI is used more widely across business, with headcount projected to increase by 9%. 

IT Spending Remains Strong 

IT spending is a useful proxy to gauge demand for tech talent, particularly in non-technology sectors. IT budget refers to money allocated for IT systems and services, including compensation for IT professionals. For example, when banks purchase IT software, they need qualified professionals to migrate their data, implement it, and continuously maintain the software. 

IT spending remains strong, despite mass layoffs at Big Tech companies earlier this year

Gartner predicted IT spending would increase to $4.6 trillion in 2023, representing 5.1% growth from the prior year. IT investments in 2022 were concentrated on cybersecurity. 

According to McKinsey, investments in trust architecture and digital identity grew the most, increasing by nearly 50% in 2022 as security, privacy, and resilience become increasingly critical across industries. Other strong areas are cloud and edge computing (centralized computing power using on-premise data centers). McKinsey predicts edge computing will win “double-digit growth” globally over the next five years. 

Some Tech Companies Are Rehiring Laid-off Workers 

Certain tech giants responsible for this year’s most devastating job cuts are pulling a U-turn and rehiring thousands of jettisoned workers. In September, Salesforce was hiring over 3,000 people, despite axing 10% of its staff earlier this year. The new hires will work across its sales, engineering, and data cloud product teams to grow the company’s AI business and attract further investments. 

Salesforce CEO Marc Benioff hosted an ‘alumni event’ to win back 50 executives. Attendees received gift bags including stuffed animals in yellow shirts bearing a boomerang illustration—an analogy for the company’s hopes that former staffers would “boomerang” back to the company. After a surprisingly strong second quarter, Meta began courting “dozens” of the 21,000 employees they laid off earlier this year as Instagram Reels gained popularity with advertisers. 

Companies that handled the layoffs poorly—notifying workers en masse via Zoom or simply deactivating their corporate email accounts—will have a harder time wooing former employees. 

The Tech Skills Gap Remains A Problem

As techies lose the upper hand they held over employers during the pandemic—commanding record-high salaries, multiple job offers, and remote work arrangements—competition for tech jobs is tightening, with companies prolonging the interview process and reinstating take-home assignments, video introductions, and other unpaid tasks that force prospective employees to jump through more hoops. 

While this analysis paralysis has much to do with recession fears, it appears to indicate a mismatch between the skills employers demand and the qualifications of the available talent pool. 

“It’s hard to find the right people for the job because there are so many different technologies, and companies typically want to hire someone who knows very specific programming languages and frameworks,” says Brunner, who points out that recruiting agencies make more money by prolonging their clients’ talent search. “If you post a job description with extremely specific keywords—for example, ‘Python’ or ‘AI,’ you’ll get fewer qualified candidates.” 

The two largest tech skill gaps are cybersecurity and cloud computing. McKinsey’s analysis of 3.5 million tech job postings found that “many of the skills in greatest demand have less than half as many qualified practitioners per posting as the global average.” 

The emergence of generative AI is only worsening the skills gap. According to Revelio Labs, over 43% of companies had over 50 technical roles they could not fill in the past year. Additionally, 78% of Fortune 500 firms leave critical roles unfilled for six months or more, partly due to strict H1-B visa restrictions and the lack of domestic talent.  

“Getting a job in tech is not about having a degree or the pedigree of the institution where you got it from; it’s having the mindset that you’ll be learning constantly for the rest of your career,” says Tomaino. “This is why bootcamps like Springboard are constantly modifying their curriculum to reflect the cutting-edge trends in tech.” 

Draconian RTO Mandates May Be “Layoffs in Disguise” 

A whopping 90% of companies plan to implement return-to-office policies by the end of 2024. Some companies allegedly use these policies to encourage employees to quit voluntarily rather than face the reputational damage of mass layoffs. If employees rage-quit, companies avoid paying costly severance packages. AT&T recently mandated that 26,000 managers across 50 states work in person at offices in nine locations.   

While the most common policy is three office visits per week (21% of Fortune 100s), instead of a return to full-time office work, employees who relocated during the pandemic face the tough choice of moving back to overcrowded, expensive city centers or losing their jobs. 

Tech Roles Are Still In-demand, But Landing One Isn’t Easy

The U.S. Bureau of Labor Statistics estimates that between 2021 and 2031, jobs for cybersecurity analysts will grow by 31% and software developers by 25%, outpacing the average 5% growth rate. 

Landing a tech job has always been competitive—whiteboard coding challenges, design challenges, and multiple rounds of virtual and in-person interviews—but the job market is especially tight in Big Tech, where companies are hiring more slowly. 

“Students who are not getting interviews need to use AI software like Jobalytics or Jobscan to optimize their resume to pass the organization’s applicant tracking system (ATS),” says Tomaino. “If one role has 500 applicants, the recruiter will only go through the applications that make it to their inbox.” 

Tomaino also advises students to look beyond the FAANGs and try to get an employee referral for the job applications they’re seriously considering. This means asking professionals on LinkedIn for informational interviews, attending conferences and networking events, and constantly connecting with people in your dream industry. 

“If your name is tied to an employee referral, you will likely get an interview,” she says. “Many companies have referral bonuses because it’s important to them to hire someone who has been vetted by an existing employee.”

About Kindra Cooper

Kindra Cooper is a content writer at Springboard. She has worked as a journalist and content marketer in the US and Indonesia, covering everything from business and architecture to politics and the arts.