Layoffs in the Tech industry is a problem that has been with us since the end of 2022. And, for now, the end of the cycle is still somewhere in the future. Companies of all sizes have been affected to a varying extent. Some of them have also seen their values diminished at the same time. But how long are these Tech layoffs going to continue?
We spoke to Layla White, CEO of TechPassport, about the problem that startups are facing. Her company includes a database of over 300, whilst a further 3,000 firms form part of TechPassport’s ecosystem. Each month more than 50 firms are showing interest in working with TechPassport and its clients.
TechPassport sits in between banks and their suppliers. Which means that Layla is ideally placed to be able to understand the depth of the challenge that startups face today.
Layla started by offering how there may have been a problem with budgeting and forecasting in many cases. Also, some startups may not have been able to gain enough investment. Finally, banks and other larger firms have been cutting back due to inflation.
So coming into the third quarter of 2022 it was already looking very difficult on the market. The war in Ukraine continued to cause turbulence in global markets especially as the price of oil shot up. The news from FTX was also causing some panic in certain sectors which culminated in the problems with Silicon Valley Bank and others that we saw coming into March 2023.
Big Tech layoffs were not just about cutting Tech roles
Facebook’s Meta and Google’s Alphabet were some of the highest profile firms who announced cuts. They were not exclusively laying off tech talent though. Additionally, they cut roles in HR to admin to customer services.
Confidence in the tech market collapsed. Valuations have plummeted. Companies have realized that 2023 will be a much bigger challenge than they had envisioned.
Lessons to be learnt from the Tech Layoffs
Layla has worked in public and private sector and is used to managing large budgets before starting her company. Going into 2023 Layla believes that we are not at the end of the cycle yet and that more layoffs may still occur.
When it comes to the demand though, not all banks are feeling the pinch. Some banks are still increasing innovation even into 2023. However not all banks have strengthened their innovation teams. Some banks have chosen to decentralize their innovation teams outside of one central hub. This process of decentralizing the innovation teams has caused its own challenges. Many of the banks have chosen to decentralize. The knock on effect being that suppliers have had to look for multiple client relationships rather than one central innovation hub, which was the case often in the past.
Since January 2023 share prices in companies such as Facebook’s Meta and Google’s Alphabet have grown substantially. Investors are rewarding the behaviour of companies that are addressing rising costs. So it should be no surprise that banks have followed this same model.
How Long Will Layoffs Continue?
The current conditions on the market have reminded many leaders of how important it is to look at all facets of their business. Growth is no longer the only driver. Today businesses need more from their leaders than ever.
The leader of today, and tomorrow, needs to be even more well-rounded. They need to be able to work with Gen Z employees, as well as investors, but most importantly they have to work on scaling their business.
But, with the right team, there is no reason for worry. The future can be bright again. But the future needs a braver and often more flexible and robust leader. Are you ready to be that leader?
Understanding that the sales cycles will be even longer today. Especially with these new decentralized innovation teams that banks are establishing. Is going to be one of the most important things for leaders to overcome. Today, and tomorrow.
Author: Andy Samu