Are the tides turning in the tech talent market? High-profile tech firms have generated headlines in the last few weeks as Netflix, Zillow, and Carvana, among others, have announced layoffs, while other large tech firms including Salesforce and Meta have announced hiring freezes or slowdowns. However, digging into the data, the layoffs at these organizations are not hitting tech. Meta is freezing hiring in certain products, such as Messenger for Kids, but continuing to grow their teams in AI and ML — capabilities that they believe will put them at an advantage. Even firms with high-profile layoffs such as Peloton are continuing to hire developers and other tech roles.
The technology labor crunch is still very much in evidence. Attrition continues to hover around 14%, and tech days are among the hardest (and longest) to fill. Furthermore, on both the long-term and short-term horizons, the demand for tech talent far outstrips supply. Labor costs are not going to subside anytime soon. But with rising inflation and a potential recession in the future, we may see attrition rates start to drop if employees have less confidence in the external labor market, thereby slowing down job-hopping and increasing job tenures.
With layoffs and downsizing unlikely to lead to high performance, what are today’s tech execs to do? Christopher Gilchrist is leading some fascinating research into how some of the most successful organizations create value through orchestrating an ecosystem of partners and platforms, rather than keeping all value consolidated in one enterprise — a capability which requires highly skilled tech talent to be successful. Leading tech organizations will instead put that tech talent to use, focused on creating differentiating value for customers and shareholders alike.
Build Adaptive Capabilities In Your Workforce To Manage Market Disruption
As a recession looms on the horizon, the tech talent market may reduce from a frenzy to a rolling boil, but it’s not the time to step back from the good practices that firms have been building to create a more adaptive organization that meets the demands of the business. Tech execs should:
- Apply tech to manage demand. Tech execs are going to be asked to do more with less. Look to your technology to scale your capacity. Use practices such as AIOps and low-code platforms to reduce the predictable and repetitive work being done by your organization, and scale those capabilities to increase the capacity of work that can be taken on.
- Keep making “anywhere work” work. Remember, the tech labor market is still going to be constrained. The balance of power is still going to sit with tech labor, not with the enterprise. You are still competing with many other organizations who need AI, automation, and development capabilities just as much as you do. Now is not the time to start walking back from anywhere-work practices. Now is not the time to create a system of haves and have nots when it comes to those who prefer in-office presence. Instead, now is the time to build effective practices that work for all, in order to attract, grow, and retain the best talent.
- Build models that support rapid redeployment of talent. A recession often means a change in organizational strategy. Organizations that build adaptive capabilities that can easily redeploy talent are the most successful. Use capability mapping to determine which capabilities deliver most value, where you need to invest in upskilling, and how you might use partners to augment the development of new capabilities. Make sure that the value that the technology organization creates for the customer is well known and understood, or otherwise technology will be seen as a place to cut costs and drive efficiencies, not create opportunities.
If you want to know more about how to think about your operating model and labor strategy, please reach out to set up time for an inquiry.
Also, be sure to check our my session at the upcoming Technology & Innovation North America event.