The number of job cuts in the country’s IT sector jumped 13 times from the previous year in 2022, but demand for skilled engineers remains strong, with few laid-off workers having trouble finding new jobs.
After the 2000 bursting of the dot-com bubble, engineers who had left major IT companies played a key role in spurring the growth of innovative startups.
With the deepening talent pool, the same thing could happen again, according to IT experts.
Climate Draft, a group of tech companies and venture capitalists, and other businesses hosted a virtual event in mid-January to help IT engineers meet potential employers in the environment sector under the banner of “From Big Tech to Climate Tech”.
Venture capital executives urged about 500 participants to take advantage of growing opportunity in the climate business, citing a study that estimates the cost of achieving a zero-carbon economy at more than US$100 trillion.
The website for the meet-up event lists job offers from more than 460 start-ups.
Amid the Covid-19 crisis, US tech giants rapidly expanded their workforces in anticipation of rising demand, but many are now cutting back to adjust overstaffing.
Meta Platforms CEO Mark Zuckerberg admitted that his company’s pandemic-era growth forecast had been too optimistic.
Meta, Amazon and Google parent Alphabet have all announced layoffs of more than 10,000 employees.
Last year, US tech companies unveiled plans to shed a total of 110,000 workers, a 13-fold increase over the previous year and accounting for over 60% of such job cuts worldwide, according to Layoffs.fyi, a US job information website.
This year, the number of layoffs in the US has already topped 50,000 in the face of growing pressure for cost cuts.
Still, the surge in workforce reductions offers good opportunities to startups eager to add more IT talent.
The US technology and information sector had a monthly net inflow of more than 10,000 workers – the number of new hires minus layoffs and other job cuts – in the second half of 2022, according to the US labour department.
Some 80% of laid-off workers landed new jobs within three months, said ZipRecruiter, a US job service agency.
Wages also reflect robust demand for tech workers.
Weekly wages at data-processing concerns averaged US$2,040 late last year, up 17% from early 2021, according to labour department statistics.
Wages at programming companies rose 12% in the same period, much higher than an average 7% increase in the private sector overall.
When workers move from tech giants to startups or nontechnology businesses, their IT expertise often helps their new employers better compete with established companies, a process that has helped spur the industry’s growth.
“When the dot-com bubble burst, Google, then a budding tech company, took on many engineers axed by big companies, gaining a foothold for future growth,” said Margaret O’Mara, a history professor at the University of Washington.
The global financial crisis of 2008 also paved the way for the emergence of sharing-economy companies like Uber Technologies.
This could happen again.
Christopher Fong, the founder of Xoogler.co, a network for ex-Google employees, said, “Many of us are seeking jobs at start-ups and not at other tech giants.”
Nearly 30% of those who left tech companies have found work in other industries, including retail, finance and healthcare, according to ZipRecruiter.
With tech giants facing slower growth, many IT talent will find new opportunities elsewhere, setting the ground for the future transformation of the industry.