Employment of technology enters the big freeze

As the global economic slowdown continues to deepen, many tech companies are responding to fears of an upcoming recession by reining in hiring.

While cutting payroll costs may seem like an easy way to cut spending right now, the job landscape remains in flux, with research showing that workers are just as pessimistic about the economic climate as their employers.

As a result, 60% of US job seekers say they feel a greater urgency to find a job now, before market conditions change for the worse. This may leave companies that have decided to stop hiring with a drain on the talent they can’t close.

Where does the technical hiring freeze happen?

Google and Microsoft were among the first companies to announce a pause in hiring, and Meta, Apple, and many others soon followed.

As reported by The Verge, Google sent a note to employees in July stating that the company would “slow the pace of hiring for the rest of the year.” A little over a week later, The Information reported that Prabhakar Raghavan, Google’s senior vice president, sent an email informing workers that no new employees would be hired for the next two weeks. The freeze will reportedly not affect existing job offers, but no new offers will be made to anyone whose applications are still pending.

Microsoft also announced that it will remove all open job advertisements and implement a hiring slowdown for the foreseeable future. The hiring slowdown will mostly affect the company’s cloud and security units, according to a report from Bloomberg. The announcement comes two months after Microsoft announced that it plans to slow hiring in Windows suites, Office and Teams.

Google and Microsoft aren’t the only tech companies that are beginning to take a more cautious approach to hiring. Earlier this year, Twitter initially issued a hiring freeze, then laid off 30% of its talent acquisition team earlier this month.

At the end of June, Meta CEO Mark Zuckerberg was hostile on a call with employees, saying that “realistically, there might be a group of people in the company who shouldn’t be here.” A month later, the company’s financial results for the second quarter of 2022 showed their first-ever decline in revenue, with Zuckerberg telling investors that the economic climate looked more dire than it did in the previous quarter.

Around the same time, Apple also announced that while the company would continue to invest in product development, it would not increase the number of employees in some divisions next year.

Uncertain employment scene

These moves come against the background of the uncertainty in the geopolitical and economic landscape that prompted most organizations to adjust their financial forecasts. The TrueUp layoff aggregator estimates that since the beginning of 2022, 487 tech companies have announced layoffs, affecting 86,166 employees.

Jack Kelly, founder and CEO of The Compliance Search Group and Wecruiter.io, said companies will always take steps to mitigate poor economic conditions, while cutting costs within the workforce is often an easy option.

“The sad part is that companies are almost always looking almost immediately to bring down staff costs,” he said. “The CEO never says to the board: ‘Hey, let’s all take a big share. “It should happen, but instead companies end up cutting salaries and benefits instead. I think we will see the labor market become very weak, making it difficult for a lot of people to find jobs.”

How might the workplace respond?

Kelly said companies are also likely to get more careful about how they hire, and as a hiring freeze turns into layoffs, we could see a reversal in some of the flexible working practices that have resulted from the pandemic, as employees fear they will be labeled as “shockouts” or low performance.

“I wouldn’t be surprised if a lot of people came back to the office because honestly I would,” Kelly said. “I would be afraid if I was at home and they decided to kick people out, if they didn’t see me or didn’t remember who I was, it would be easier to get rid of me then someone in the office every day.” The issue of close bias remains a concern among organizations looking to successfully implement hybrid business models.

However, Shaun Farrington, executive vice president for EMEA at training software company Pluralsight, doesn’t think closing the door on potential new recruits is necessarily the most sensible solution in tough times.

Although Europe’s economy isn’t much healthier, Farrington said European companies with great tech teams to talk to are instead evaluating the talent they already have and looking for opportunities to upskill and retrain existing employees.

Farringdon does not see workforce cuts as the most reasonable way to save costs. “Particularly given the backdrop of the growing skills gap in technically qualified individuals and the broader policy dialogue on how to reinvent the economy for a digital world,” he said.

Research shows that employees want regular training and the opportunity to develop new skills and are more likely to stay at the company if they are given these opportunities. The great resignation was a major topic of conversation in the first half of this year, and for companies that are no longer hiring, losing more employees is not an option.

“If someone leaves your organization, you will have a gap, and therefore you cannot be as efficient and productive as you were,” Farringdon said. “The first thing you should do,” he said, “is to be careful with your human capital and make sure you don’t inadvertently lose people by not showing commitment to your employees, or by not showing that you value them in some way.”

Although the job market has largely recovered after the pandemic, the looming recession is likely to bring with it a whole new set of challenges for job seekers. While the hiring freeze at tech companies has yet to translate into mass layoffs, current employees will still find themselves grappling with stagnant salaries, less inflationary wage hikes, and increased commuting costs associated with higher gas prices, as boom times appear to be coming. End.

Copyright © 2022 IDG Communications, Inc.

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