The begin of 2023 has seen a number of of the know-how trade’s largest names, together with Microsoft, Amazon and Meta, announce tens of hundreds of job cuts.
This is towards an financial backdrop of excessive rates of interest and rising inflation, prompting tech companies to search out methods to scale back their working prices as their prospects equally search to tighten their belts too.
Many of the tech companies chopping jobs now launched into big hiring sprees throughout the Covid-19 coronavirus pandemic, because the world pivoted en masse in direction of distant working – and social distancing pressured individuals to depend on digital providers and apps like by no means earlier than.
While the Covid-19 virus stays an ongoing presence, the restrictions it positioned on individuals’s actions are actually – in most components of the world – now not in play, which has led to a downturn in the reliance of customers and companies on some of these tech companies’ providers.
Music streaming service Spotify revealed a memo on 23 January 2023 stating its plan to scale back its worker base by “about 6%” as a result of firm’s operational expenditure development outpacing its income in 2022, with the agency’s CEO admitting to increasing the corporate too shortly.
“Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us,” stated Spotify CEO Daniel Elk.
“In hindsight, I was too ambitious in investing ahead of our revenue growth. And for this reason, we are reducing our employee base by about 6% across the company.”
Silver lining to job cuts cloud?
With so many tech companies seemingly developing towards the identical financial challenges and having to chop their everlasting workers, what does this imply for the employment prospects of the IT contractor neighborhood, given the roles market will now – seemingly – be flooded with new entrants?
Research revealed on 16 January 2023, compiled by IR35 insurance coverage supplier Qdos, suggests 2023 is a yr that contractors have already been feeling trepidatious about, because of the fallout from the UK authorities’s flip-flopping over repealing the IR35 reforms and the continued cost-of-living disaster.
“Contractors have been up against it recently, but with [the Qdos research showing] 80% [were] able to secure a role outside IR35 last year, independent workers can look ahead with some confidence – for the first time in what feels like a long time,” Qdos CEO Seb Maley informed Computer Weekly.
“The economic uncertainty, while concerning for many businesses, could – in my opinion – be a catalyst for contractor demand.”
Speaking to Computer Weekly, Matt Collingwood, managing director of IT recruitment consultancy VIQU, stated whereas headlines about mass layoffs would possibly point out the IT market is in the doldrums, demand each for contractors and everlasting workers stays buoyant.
Matt Collingwood, VIQU
“Yes, some high-profile big tech companies have been making layoffs, but I don’t think you can take this as a fair indicator of the IT market as a whole. Big tech companies normally pay ridiculously high salaries – [and] I’ve spoken to engineers who have been on triple or quadruple the salary or rate that an average professional with their skillset would be on,” he stated.
“When you carry these expensive staff, it’s only natural that some will have to be cut when there are global uncertainties and upheaval.”
He added: “It might be unwanted disruption, but these professionals being laid off are not leaving these companies without a new job or contract to go to.”
To again this level, Collingwood cited the job-seeking expertise of one ex-Meta staffer who he claims remains to be in the throes of working his redundancy interval however has already secured 5 job provides.
Terry Payne, international managing director at digital-focused recruitment agency Aspire, stated it was additionally price noting that in intervals of financial instability, demand for IT contractors often will increase.
“Increasingly, businesses wanting to remain competitive realise that their technological capabilities are critical to operating with greater efficiency and seizing new opportunities,” he informed Computer Weekly.
“There’s an abundance of highly skilled workers available and, as previous recessions have taught us, freelancers and contractors provide vital support to businesses and the economy during difficult periods.”
Dave Chaplin, CEO and founder of contractor compliance agency IR35 Shield, backs this view: “Generally, giant companies are not looking for giant numbers of everlasting workers as a result of they convey big ongoing value. In the present financial local weather, with no certainty, companies would like to rent contractors on an ‘as needed’ foundation with out these ongoing prices.
“Firms will always want and need contractors. The peaks and troughs of the economy just dictate how much they will need to pay to access the best freelance talent. Typically, a contractor can demand twice as much at the peak of an economic boom compared to the trough in a recession.”
Time to rethink expectations
For this purpose, IT contractors might also want to think about revising down their day charges in the present financial local weather, suggested Juliet Eccleston, CEO and founder of skilled networking and job referrals hub AnyGood?
“We’re seeing continued investment in strategic programmes [including tech-related ones] across large organisations – many of which have made redundancies – which is fuelling contractor demand. There is, however, increased tension in the desire for higher rates due to the cost of living, challenged by rising business costs,” she stated.
For this purpose, she stated, it’s essential for IT contractors to be “mindful” of the financial atmosphere they’re providing their providers in.
“Rates need to be fair, but I’m not seeing organisations agreeing to high rates just to secure people. Rate discussions need to be considered with all aspects of the contract on offer. In particular, the opportunity to secure a long-term contract on a large programme may be a better business decision in the long run, given the continued economic outlook,” she stated.
“I believe IT contractors who have in-demand skills – in the UK at least – can feel optimistic, and for those feeling unsure, my advice would be to invest in development of high-demand skills to stay competitive.”
Meanwhile, Collingwood added that IT contractors would possibly should be open to accepting shorter contracts than they may have beforehand, because the financial state of affairs means many hiring companies are taking a a lot shorter-term view on IT venture planning.
“Previously, clients were talking openly to me about their project plans for the next six to 12 months and the resource they require. Typically, now they are choosing to only reveal their immediate plans or needs for the next three months,” stated Collingwood.
“Yes, there’s some uncertainty that’s impacting long-term planning, however this isn’t impacting the necessity for everlasting members of workers. I might simply say that corporations are in search of extra confidence in the individuals they make use of than in 2021 and 2022.
“Previously, they were just grabbing any resource they could, but now clients are looking for more reassurance that they are making the right hiring decisions. Therefore, the lead time from engagement to placement has slowed for both contract and permanent hires.”
Learn new expertise to remain related
Collingwood, Payne and Eccleston’s upbeat take in the marketplace can also be echoed in the findings of the Winter 2023 Europe labour market report by contingent workforce administration software program supplier, Magnit.
The 16-page report states that the financial turmoil the UK market, particularly, has discovered itself in means demand for non permanent IT staff is prone to stay excessive as a result of employers might want to “increase agility under these circumstances”.
Dave Chaplin, IR35 Shield
According to Magnit’s findings, knowledge analysts, cloud computing engineers, synthetic intelligence (AI) architects and managed services-related experience are prone to be the contractors in highest demand in the UK.
“The threat to any contractor is their skills becoming obsolete,” stated IR35 Shield’s Chaplin. “Unlike a firm, which pays to train its staff, a contractor has to invest in their own self-development in their spare time just to stay current.”
And with instruments rising that may write code for themselves, such because the pre-trained chatbot ChatGPT, it’s important that IT contractors give some severe thought to growing expertise that can guarantee they continue to be in excessive demand, even when components of the work they do are actually being achieved by AI.
“The skills that will survive AI tools are ones associated with strategic thinking and planning about what to build, rather than how to build it,” continued Chaplin. “The graveyard of software systems plays host to an abundance of software products that never made it properly into production, simply because the requirements were wrong.”
…. to be continued
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