A recent series of mass layoffs in the tech sector, including the layoff from Amazon and Meta of tens of thousands of workers, has created an incredible opportunity for companies that previously aspired to grow their ranks but couldn’t due to a lack of talent. Traditional companies that previously struggled to modernize business processes now have access to some of the best talent in the world. The same traditional companies, who could never afford to compete with recruiters from Silicon Valley companies, can now step in and offer career lifelines to laid-off tech workers.
We believe that the current layoffs have created a great opportunity for traditional companies. By recruiting and hiring from the former ranks of the world’s top digital companies, they are able to gain access to new talent in a less competitive marketplace. This talent can help turn your stagnant business models into digitally agile ones, preparing for increasingly turbulent business environments. In this article, we identify the reasons for these layoffs. We then explain what companies operating outside of the tech sector can do to benefit from the sudden influx of talent.
A reversal of overcontracting
We are witnessing a massive reversal of the over-hiring that took place during the pandemic. Meta CEO Mark Zuckerberg wrote: in a message to employees regarding recent layoffs, “At the start of Covid, the world moved rapidly online and the rise of e-commerce led to skyrocketing revenue growth. Many people predicted that this would be a permanent acceleration that would continue even after the pandemic… Unfortunately, this did not turn out as expected.”
Stripe CEO Patrick Collison wrote a similar statement explaining a 14% reduction in staff: “At the start of the pandemic in 2020, the world turned overnight towards e-commerce. We witnessed significantly higher growth rates over the course of 2020 and 2021 compared to what we had previously seen… The world is now changing again.”
The technology sector was not prepared for such a sudden increase in interest rates, which slashed the valuations of companies whose profits would come in the distant future. This occurs because the discount rates involved in valuations increase with interest rates. The high-tech NASDAQ has decreased by 30% in the past year. More aggressive tech funds, such as Cathie Wood’s Ark Innovation fund, they have lost 65%. Many fintech funds and crypto funds they have gone bankrupt. commissioning activity has come to a standstill, and initial public offerings have drying. This affects the growth plans of capital-hungry tech companies, which are now cutting back on hiring in anticipation of growth plans.
But these challenges shouldn’t affect traditional companies with strong fundamentals, at least not to the extent that they affect young tech startups. Unlike other recessions, when employers eliminate roles that are no longer critical to business operations, recently laid off employees offer a wide range of highly sought-after skills. Amazon laid off workers from its Alexa division, which handles voice technology, artificial intelligence and automation, among other technologies. Twitter removed workers from its ethical AI, data science, machine learning and engineering teams.
An opportunity for traditional companies to modernize
The pandemic also ushered in a new era in how businesses work. Organizations realized the need to transform business processes to be more flexible. Remote work, for example, requires more than holding Zoom conferences from home. Managers are now just as capable of running a bank’s entire forex trading platform from home as they are from a corporate office.
This permanent and deeper shift to hybrid work requires new HR systems, a restructuring of workflows, new and updated e-commerce platforms, engineering improvements, enhanced cybersecurity, and more. Companies that were too slow to build these systems during the pandemic can now capitalize on an influx of talent to show them how it can be done.
A year ago, a young, aspiring software engineer would probably be more inclined to join a crypto exchange than the e-commerce division of a traditional retailer. Now, with tech companies downsizing, a brick-and-mortar retailer, or any company with strong fundamentals that hasn’t fully modernized yet, can now outperform tech companies in hiring the talent they need.
Who should your company hire?
Traditional businesses should focus their recruitment on employees who can help them achieve the following: transition to a remote workforce, analytics and optimization of the customer journey, automated customer service, data-driven information collection and use. AI to improve sales efficiency, automate employee performance management, improve supply chain management, and optimize human resource planning.
Digital transformation success stories include Target, Nike, Home Depot, Hasbro, and Best Buy; failures include GE, Ford, and Procter & Gamble. In each case, employees were the determining factor in the success of the transformation efforts.
If you work in a traditional company, you should use recent layoffs as an opportunity to look for employees with the following skills:
- Customer experience
- Product and platforms
- data management, and
- Cybersecurity and privacy
Economic volatility always creates business challenges, but most of today’s challenges can be mitigated with digital transformation. If we enter a recession, for example, and the current inflationary environment continues, customers will be forced to change their discretionary spending. Retailers can develop and use technologies, such as machine learning and agile systems, to identify buying patterns, understand buying behaviors, tailor promotions and special offers, personalize product recommendations, change prices on the fly, and balance supply with demand and customers. that change quickly. preferences
This opportunity exists in some form or fashion in every industry. But you can only benefit from it if you have the employees who can implement these technologies. Fortunately, tens of thousands of these workers have just arrived on the market.
Steal employees from tech companies
Recently laid off employees are not the only source of talent. Companies should also look for sneaky employees who still have jobs but want to leave precarious jobs at tech companies. As tech companies cut R&D and new projects, cut headcount and cut employee salaries and bonuses, and as falling stock prices drag down stock options under the water, employees are now looking for more stable employment opportunities.
Tech workers in the US who are from countries like India and China can only stay in the country on H-1B visas. If they are fired, they must find new job within 60 days or they must abandon their visa and leave the country. Many of these workers who have not yet been laid off are probably worried about the prospect.
Acquire struggling tech companies
This is also an opportune time for traditional organizations to acquire technology companies and purchase assets at liquidation prices, especially those companies that are struggling to raise funds to maintain operations. Some acquisitions may take the form of buyouts, that is, acquisitions for the purpose of hiring talent. Some start-ups hold patents that are valuable resources for the acquirer. Some start-ups have developed new business ideas or even created an upcoming brand, but lack the marketing and financial muscle to launch them on a large scale. Businesses can now purchase these valuable assets at discounted prices to unlock their value.
History has shown us time and time again that recessions and tough times create winners among those who capitalize on opportunities and acquire the right assets, customers, talent and skills at the right prices. The recent wave of layoffs represents that moment.