Is big tech’s red-hot jobs market about to cool?

The industry’s giants are slowing their hiring

This article was originally published by The Economist on 2 June, 2022

“Can i keep the monitor and mouse?” a fired tech worker recently asked on Blind, an anonymous social-media platform where techies go to compare notes on employers. The questions used to be about how much Meta was paying or what perks Apple offered. As America’s technology giants contend with supply-chain uncertainties, a looming recession and sliding share prices, many users are instead asking if the sizzling market for tech jobs is cooling.
 

The first sign of trouble came on April 28th. In a quarterly earnings call Brian Olsavsky, Amazon’s chief financial officer, said that the e-commerce titan’s warehouses were overstaffed, costing about $2bn (9% of operating profit) in the past year. A memo leaked a week later from Meta, Facebook’s parent company, said the firm was putting a freeze on new hires in most teams. Other big tech names, including Microsoft, Nvidia, Snap and Uber, have made similar noises. So far this year listed tech firms worth a combined $3.4trn have announced hiring freezes or firings.
 

The commotion comes after a prolonged boom in tech jobs. During the 2010s the number of positions in America’s tech industry increased by 4.4% a year on average, triple the rate of the overall economy, according to a study by the Brookings Institution, a think-tank. The pandemic turbocharged the trend. Work, leisure and shopping shifted online, boosting demand for digital services. Last year listings for tech jobs increased by over 80% compared with 2020, observes Amit Bhatia, co-founder of datapeople.io, a research firm. Demand for tech skills also surged outside the sector as companies uploaded their operations to the cloud and boosted cyber-security, making the market even tighter. The number of applications for each tech-industry opening fell by a quarter in 2021.
 

Much of the jobs growth came from startups and newly listed companies. But the tech giants, too, were adding plenty of employees. Between 2020 and 2021 Amazon, Meta and Netflix all increased their full-time staff by over a fifth. The ranks at Microsoft and Alphabet swelled by 11% and 16%, respectively. That compares with a median of 3% for firms in the s&p 500 index of America’s largest companies.
 

So far redundancies, rather than just hiring freezes, have been largely confined to startups, such as Getir, a Turkish grocery-delivery app, and newly public firms such as Peloton, a maker of web-connected exercise bikes. Sackings at established tech companies have been modest. On May 17th Netflix, a video-streamer, laid off 150 staff. The following week news broke that PayPal, a payments firm, was cutting 80 or so jobs. In both cases that was roughly 1% of their respective workforces.
 

Strategically important teams are protected from the measures. Microsoft’s hiring slowdown applies to its software units, such as Windows and Teams, but not its fast-growing cloud business. PayPal’s lay-offs affected staff researching emerging technologies, such as quantum computing, while sparing core functions. Many of the sacked Netflixers worked in marketing rather than on shows. Demand for the most prized skills, such as understanding of advanced data science, is so high that people who possess them will be sought out even in a downturn.
 

At the big tech companies talented employees who hint that they want to jump ship are still receiving generous counter-offers, says Greg Selker of Stanton Chase, an executive-search firm. On May 16th Microsoft said it was raising its budget for salary increases for certain workers, in an attempt to stop talent from fleeing. Amazon did something similar a few months earlier. Tech-focused recruiters say business is perky. Indeed, the number of listings for technology-industry jobs in May and April was far higher than at the same time last year, notes Mr Bhatia.
 

Some analysts argue the tech industry is bigger, more mature and stable than in the go-go 1990s, which may shield its workers from the pain of previous busts. Others note that after the dot-com bubble burst in 2000, tech work began disappearing only a year after the stockmarket crash. One thing is certain: the anxiety level of posts on Blind will stay high for a while.