The truth behind those gloomy tech layoff headlines – LLODO



“X company lays off X number of workers” has become a disheartening boilerplate in tech news lately. But amid the doom and gloom, little is being said about companies that are pushing forward with hiring—and there’s more of them than you may expect. For example, Databrick announced that it will add 2,500 workers this year, while other companies have even opened new offices in London to accommodate their expansion plans.

Many of the layoffs that have taken place have been focused in departments outside of tech teams or underperforming tech personnel. For core product roles, however, tech hiring is still strong—and more so for specialized positions like cybersecurity. In fact, employers in the United States posted close to 715,000 cybersecurity openings in the 12-month period ending in April. 

Elsewhere, Fortune 500 tech management consulting company, Booz Allen Hamilton, is offering entry-level cybersecurity staff impressive salaries, knowing that it’ll need the humanpower there now and down the line.

The current market conditions are a stress test for how companies have hired and will hire. It’s a moment to consider the most efficient and smartest ways to recruit, and what proven best practices will protect businesses against the last resort of layoffs. Here are three reasons why there’s still hope on the horizon for tech recruitment.

A lesson in efficiency and sustainability

Big players like Microsoft, Apple, Facebook, and Shopify scaled so much in the past years that they were inevitably going to slow the pace. It makes sense for them to now slow hiring—the freeze is relative to their growth; it’s not necessarily a reflection of their wider strategy or performance. For smaller companies, however, layoffs and hiring freezes are more likely to signal challenges in how the business operates. Pausing new hires won’t eradicate those obstacles, nor will they be gone when the market does settle. In these cases, the layoffs are a result of inherent inefficiencies, not just the market.

The businesses that we’re seeing continue to hire are the ones that run a well-oiled machine; they have 12-24 months’ worth of cash, and they’re putting that toward long-term, strategic hiring. For example, GitHub has said that it will hire positions that “increase long term business impact.” And, in light of the capital boom of last year, some well-funded companies are in an advantageous position to attract top tier candidates that have been let go from other companies. As a recent TechCrunch article puts it: “in a more favorable tech labor market, these organizations can get more human capital for their financial capital than anticipated.”

In-house and outsourced candidates are working in tandem

Businesses undoubtedly have to double down on efficiency at the moment, but that doesn’t mean that companies that are in a position to hire shouldn’t. There are ways to continue growing teams while keeping costs low. Outsourcing has always been a good option to preserve runway, plus tap into quality candidate pools, and foster a more global mentality.

That said, the savviest companies know that outsourcing or contractors staffing should be used alongside in-house teams. Certain roles naturally lend themselves to being outsourced, and others do not. It’s best to keep core competitive positions in-house in order to have those people harmonized and more invested in the work they conduct. They’re also likely to have higher retention rates, so leaders won’t need to worry about losing and onboarding essential staff amid a downturn.

Tasks that are repetitive or that don’t have as big a stake in business outcomes but are still important can be outsourced. Alternatively, fractional hiring aligns well with forecasting budgets, where companies bring onboard part-time contractors and later convert them to full-time employees. Using contractors is worthwhile in uncertain markets because it offsets some risk for companies—you don’t have to pay severance nor provide long notice periods if the relationship isn’t right.

Companies of the future are “default global”

Recruitment was already changing long before the current downturn—and that shift impacted how people now build companies. Organizations are opting to be global from day one. Rather than have a “default local” model where the business is oriented around a specific headquarter in one location, and that team recruits from other jurisdictions, companies are launching without a nucleus office. It’s why VC firm Andreessen Horowitz now says that “the company of the future is default global.”

A decentralized way of maintaining and growing teams is complementary to tech workers who generally prefer to work remotely. Both Basecamp and GitHub were global from day one, which is a big part of why their workforces stayed with them throughout the pandemic and ongoing downturn. Not to mention, decentralized businesses access more diverse people and skill sets—qualities that can help companies survive in turbulence because of the fresh perspectives and experience they add. For instance, workers from emerging markets tend to have a “do more with less” mentality, being familiar with economic challenges and limited resources.

The companies that have applied a global focus have a stronger footing to hire people at more cost-effective salaries and in return offer greater value to remote tech workers. That value includes a fully realized remote culture, flexibility, greater job stability, and perks like equity in a more resilient business.

No company easily arrives at the decision to make layoffs, but the tech layoffs we’re seeing now are only a chapter in the bigger tech story. Recruitment still has, and will have, momentum. We need to look to the players that are hiring despite the conditions, and take note of what has enabled them to do so and how they’re doing so. With these insights, tech will ensure more businesses and workers reach a happy ending.


Sergiu Matei is the founder of Index, a platform that helps teams find and hire world-class remote software developers, and be globally compliant from the get-go.






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