Recent headlines are filled with news of tech sector layoffs, hiring freezes and job offers being pulled in the midst of economic uncertainty.
But according to members of the CNBC Technology Executive Council, hiring won’t slow down and it’s not getting easier to find the talent these companies need.
Approximately 32% of tech leaders who responded to a recent survey said that it’s gotten “harder” to find qualified people for their open positions; an equal percentage reported that it’s gotten “significantly harder” to find the talent they need. The latest biannual survey of TEC members was conducted between June 3 and June 22.
Over the past few months, an increasing number of companies have been painting a far different picture of what the labor market looks like. Companies including Uber, Meta, and Microsoft have announced that they’re slowing down hiring as inflation rages and talk of a recession intensifies.
Meanwhile, Redfin, Netflix and Klarna are among the companies that have announced layoffs. And in a complete reversal of the white-hot labor market of the past year, Twitter, Redfin, and Coinbase are rescinding job offers they’ve made, citing the turmoil in the economy.
That’s a dangerous strategy to employ, says Brian Kropp, vice president of human resources research at advisory firm Gartner.
“It looks bad and it is bad to rescind job offers,” he said. “So many of these companies have spent an enormous amount of energy to talk about their values and how they’re building a more human organization with additional support for things like mental health. To then turn around and rescind job offers for essentially little financial return is very short-sighted,” Kropp added.
“Not only does it affect the people who now don’t have a job they were offered, it also affects all your other employees who are thinking ‘If the company does this to someone they went through the trouble of interviewing and hiring, what does that mean for me?’” he said.
A unique opportunity
This tumult in the labor picture presents a unique opportunity, respondents to the survey said. While nearly one-third believe they will likely need to make adjustments to their own headcount in the coming year, 55% said the churn in the labor market gives them the chance to bring in top-level talent that they otherwise might not have attracted.
That’s certainly been the case for Thanh Nguyen, founder and CEO of compensation benchmarking startup OpenComp. He said his company’s talent pipeline “has never been better” and that he’s seeing significantly more candidates than what he was competing for before news of layoffs began happening. “I think some of those candidates we would not have seen or have even had a chance to interview, but now we can,” he said.
The need to pay higher wages to get skilled talent was reported by 86% of TEC members. Tech recruiters tell CNBC that despite the headlines, the job market in tech is still hot, with workers in the driver’s seat.
It’s likely that the mix of that compensation will begin to change. A blend of equity and cash has long been the practice for pay packages in tech, according to Nguyen.
“But what we’re starting to see is earlier stage companies being less aggressive on cash and more aggressive on equity for job offers because their cash burn is so paramount now,” he said.
Compensation may shift more in the coming year, says Nguyen, as a potential recession would reset labor costs as more people stay in positions longer. “As people moved around, it up-leveled compensation by 10% to 15% across the board,” he said. “In a recession, labor costs will start to stabilize.”