[software] What is happening with the wave of layoffs in the technology sector?

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Its large multinationals have already laid off more than 230,000 people in 2023, but the demand for professionals with technological profiles continues to rise. We explain how it is possible

After years of hearing about digital transformation, the fourth industrial revolution and the lack of technological profiles, it is not surprising that the wave of layoffs that has affected the sector since last year has taken many by surprise. The numbers are, in principle, nothing trivial: if in 2022 the big technology companies laid off more than 164,000 workers, in 2023 they have already exceeded 234,000, according to the Layoffs.fyi portal. Only in Meta, 21,000; in Now, are we witnessing the bursting of a new bubble of inflated expectations?

Apparently, nothing could be further from the truth: “[These layoffs] represent a small part of the market, although it is true that they make a lot of noise. But the development of the sector remains stable, although not as abrupt as in previous years. In Spain, for example, we are seeing 5% growth compared to last year,” explains Íñigo Fernández, senior executive director of Technology by PageGroup. The National Institute of Statistics (INE), for its part, points in the same direction: according to its data, the number of professionals employed in the ICT sector grew by 3% in Spain (up to 564,137 people), and the turnover in 2021 was 110,223.3 million euros. And yet, more than 60% of companies said they had problems finding specialists to meet that demand.

How to explain this apparent contradiction?

After the pandemic, calm came... and adjustments
The origin (and explanation) of the wave of layoffs is located in the general increase in workforce that many of these companies carried out during the pandemic. Once the emergency was over, and with the waters returning to normal, an inevitable readjustment came. “During the second half of 2020 and much of 2021, the social restrictions applied to combat the virus led to an extraordinary increase in teleworking and online transactions, generating (for example, in the retail sector) a sudden expansion in growth. of digital sales and transactions to figures never achieved,” says Juan Riva, CEO and founder of Immune Technology Institute.

In these circumstances, companies were forced to readapt their workforces. With the progressive return to normality, demand moderated, “and this has caused an adjustment to be made in those same workforces. However, the growth of the online model, far from slowing down, is exceeding expectations prior to the health crisis,” adds Riva.

One of the most paradigmatic cases of this process was experienced by Zoom. This company, which tripled its size during the two hardest years of the pandemic to respond to those unexpected needs, announced in February that it was laying off 15% of its staff (1,300 people); a fact “caused by a lack of planning that would guarantee sustainable growth. Therefore, as demand fell, so much muscle became unnecessary,” says José Luis Vázquez-Poletti, professor at the Faculty of Informatics at the Complutense University of Madrid.

Meta's, he points out, was another similar case, "since it opted to make the leap from humanity to the metaverse and then had to reduce its staff on several occasions." And this, despite having announced net profits of $23.2 billion in 2022 last February, which still represented a sharp drop of 41% compared to the result recorded a year earlier. In any case, it is worth remembering that “large technology companies do not only have technological profiles. In Spain, for example, some of them only have sales or marketing specialists, and those are the positions that were affected,” says Fernández.

Other factors also weighed in, “such as the crisis caused by the shortage of semiconductors, which meant that certain technological platforms could not reach their consumers. This caused great losses for companies that developed solutions for these platforms, and which had a much faster deployment to recover their investment,” says Vázquez-Poletti. “A separate chapter is about the adventures of certain companies in the world of cryptocurrencies and, more specifically, NFTs. To this day I do not know of any case of success, but I do know of losses due to the efforts dedicated."

For the academic, however, the bubble effect has indeed occurred, driven by the attitude of the companies: "It is a behavior similar to the dotcom crash, when it was thought that the chewing gum could stretch indefinitely." Of course, although the situation changes depending on the company you look at, many of the positions that have been eliminated correspond to non-technological profiles, such as sales or marketing.

An impact beyond the technology sector
It has not only been technology companies that have experienced significant changes in their plans. Other sectors, such as banking and telecommunications, have also been affected: in the banking sector, digital transformation and growing competition from fintech have led to a reassessment of strategies and greater investment in technology to adapt to demands. of customers,” says Riva. Meanwhile, he adds, the telecommunications field has been strongly influenced by the expansion of 5G, the demand for connectivity services and great competitiveness, which have driven the need to recruit and retain technological talent.

Adapting to an environment as changing as the current one requires, in the opinion of experts, a commitment to a strategy of continuous training and skills development: “We must be updated; We have no other choice. The speed of the changes is such that, a year ago at this time, the evolution of the metaverse was a protagonist in all the media. But with the appearance, at the end of November 2022, of ChatGPT, almost no one remembers it anymore,” says Riva. A training that, in this sector, can be obtained intensively in one of the numerous bootcamps offered by digital schools. And all this without forgetting the importance of networking when it comes to staying updated and informed of possible professional opportunities.

Professional profiles with more future

  

https://elpais.com/economia/formacion/2023-09-15/que-pasa-con-la-ola-de-despidos-en-el-sector-tecnologico.html