SA国际传媒

After two years of pandemic-fueled valuations, public market climbs and billions in venture funding, bloated tech companies big and small are now trimming their workforces as the economy slows.

More than 91,000 people have been laid off from the U.S. tech industry so far this year, per a SA国际传媒 News tally. Every week brings about several thousand more job cuts in the industry, at both large tech employers and smaller venture-backed startups.

But the future of hiring in the industry is brighter than you might think, according to consultants, recruiters and data firms watching the tech labor market.

When will layoffs end? When we see more down rounds.

Startups that raised capital at inflation valuations in 2021 are more likely to need to conduct layoffs in 2023.

That鈥檚 because those companies unable to grow into their frothy new valuations and can鈥檛 raise additional capital without risking a down round may need to slash payroll 鈥� often the biggest expense, by far 鈥� to extend runway.

鈥淵ou’re going to keep cutting your headcount until you can grow into it. And we haven’t seen many down rounds yet,鈥� said , CEO of consulting firm and former people鈥檚 executive at and .

Down rounds are logistically and financially challenging for startups, especially for employees who recently left the company with stock options in hand. Down rounds tend to reduce the value of the startup鈥檚 holdings, weakening company morale. They鈥檙e also not always possible 鈥� venture firms are being more selective about the investments they make, even at lower valuations.

鈥淲e have been proponents of companies taking their medicine now and doing a down round,鈥� said , an executive at startup consulting firm . 鈥淏ut in order to really pull that off, you still have to be a company that is doing well. There are companies that raised Series Bs right after raising a Series A. In my mind, those companies just barely had Series A metrics.鈥�

What roles are getting cut? Depends on company size.

Headlines have been dominated by massive layoffs at large tech companies, and the data shows it too. Per our layoffs database, 50% of this year鈥檚 U.S. tech layoffs occurred in November 鈥� when Big Tech companies including , and cut tens of thousands of people from their payrolls.

Many layoffs from large tech giants were software engineers, according to workforce data startup . These cuts followed an earlier season of at those companies.

鈥淭hese earlier layoffs were dominated by small and medium sized tech companies, while layoffs since September have been some of the tech giants,鈥� Reyhan Ayas, a senior economist with Revelio Labs, said in an email. 鈥淚t seems that the latter still keep their hiring channel open, while the former seem to close off their hiring more.鈥�

Jones said he鈥檚 seeing his startup clients cut roles in talent recruiting and sourcing first, followed by marketing folks. Startups tend to be more hesitant to let go of engineers who, despite the tech downturn this year, are still in short supply and highly valued, he said.

鈥淭hose people have been so hard to hire recently that I would imagine companies are going to not get rid of engineering and research to that same extent,鈥� Jones said.

Good news: Laid off workers are finding new jobs fast

Despite industry wide layoffs, there are still more than 375,000 tech jobs in the U.S. that need to be filled going into 2023, according to a new report from tech insights firm . That would mean there are 4x as many job openings as there have been layoffs recorded in our database this year.

鈥淚’ve heard anecdotally many times that tech workers that are laid off are getting rehired within a week or two,鈥� said Dice CEO . 鈥淚n fact, the joke is it depends on how much time they want to take off.鈥�

Other data also seems to support that: Per Revelio Labs, 70% of laid off U.S. tech sector employees since March 2022 have been able to find a job within three months of being unemployed. That number has been steadily climbing 鈥� in October, 75% of laid off workers found a new job within three months.

Salaries for U.S.-based tech roles skyrocketed between 2020 and 2021, representing a 6.9% year-over-year increase, according to Dice data. That was in part due to a tech labor shortage that forced companies to increase their compensation and provide robust benefits packages to hire and retain valuable employees.

As it turns out, 52% of laid-off workers have found a new job with a higher salary, according to Revelio Labs. Those in sales, software and marketing compared to those in HR and communications.

Many of the large companies conducting mass layoffs are slashing more jobs than strictly necessary in order to prepare for a worst-case scenario. Some of them actually hire employees back 鈥� but getting rehired may take months as the market recovers. Companies also don鈥檛 tend to onboard previous employees until at least six months later, due to legal implications around workforce cuts.

鈥淥ne of the guidelines is that you should not be hiring for the same jobs that you did a reduction for, for at least six months,鈥� said Jason Walker, founder of tech-focused . 鈥淭ypically, employees that were let go don’t get hired back into the exact same position. Maybe they’ll come back, but if they come back they’ll come back into a different position.鈥�

Illustration: Dom Guzman