If you work in tech, that’s disconcerting. There’s also a good chance you don’t work for a big tech company, but for something smaller or midsize — a startup, maybe, or a growth company, or a company that’s in an industry other than tech. Is your job more secure with a non-Big Tech company?
Not necessarily, according to Art Zeile, CEO of tech hiring hub Dice.
The smaller the company, the higher the risk
Actually, it’s those working at smaller, venture-backed tech firms who should be worried about the possibility of layoffs more often, Zeile told Technical.ly.
“At the beginning of last year, it was very evident that venture capitalists and private equity firms, in particular, were worried about a recessionary economy,” he said. “They were the first to worry about a recessionary economy, so they made it very well known that companies should make sure that they could fund themselves for two to three years.”
As a result, a lot of smaller firms enacted layoffs in the first and second quarter of last year, a signal they understood that the cash they had in their balance sheet had to last for a considerable period of time.
“Then, toward the end of last year, more large tech firms were told by their investors pretty clearly that they were not interested in growth at all costs anymore, that they were interested in balanced growth — meaning, cut your growth rate and make sure that you’re more profitable,” Zeile said. “So there was a trend toward bigger firms moderating their growth rate, bowing their heads to their investors and saying, ‘I heard what you said and we’re complying.’”
Art Zeile, CEO of Dice (Courtesy)
While the numbers of overall layoffs at Big Tech companies like Meta, Google and Amazon look staggering, they usually amount to around 10 to 15% of the company’s employees.
Smaller tech companies are more prone to going under altogether. That’s related to the risk they present from the start: Something like seven out of every 10 VC-backed companies “will absolutely fail,” per Zeile.
“They will go out of business, they will go bankrupt, or they’ll just cease to exist,” be said. “Two will be ‘singles’” — think baseball — “meaning that the investors get an even return on their investment. One out of 10 will be the home run that saves the entire venture fund and really provides the venture capital level of return to the investors. Venture capital-backed companies have a low success rate, but they’re working on the cutting-edge technologies. Business models are unproven, in a mode of dealing with early adopters for whatever they’re working on.
“So if you’re a small tech firm, you are always at risk.”
Non-tech industry tech jobs gain steam
Zeile — whose company is all about tech employment — isn’t saying it’s a bad idea to work in tech. The definition of what a desirable tech job is, however, is changing. Big Tech companies are no longer the gold standard for tech jobs.
“I would say you’re always better off, in the technology workforce, to be with a larger tech firm, or any kind of larger firm,” he said. “In fact, I’d say that the bigger trend that’s playing out right now is that a lot of these companies that have laid off their tech workers that are in Big Tech, those people are going to banking institutions and healthcare institutions and larger business consulting companies.”
“There are a lot of firms that are still hiring tech workers, but they’re not the classic Google, Amazon, Oracle.”Art Zeile Dice
A Dice review of tech job postings in the United States in February showed that banking and finance are among the top industries hiring tech workers, followed by business consulting companies like Deloitte and KPMG, then healthcare, then aerospace and defense.
“There are a lot of firms that are still hiring tech workers, but they’re not the classic Google, Amazon, Oracle,” Zeile said. “Those have diminished their interest in hiring tech workers largely because, again, their investors have said they want profitability more than growth at this point.”
(Amazon even publicly paused corporate hiring at the end of 2022.)
Dice has found that laid off technologists don’t have to wait long to get a new job if they’re willing to look at financial institutions, so much so that a new phrase has been coined: “Security is the new sexy.”
“There is a different mindset,” Zeile said. “Even five years ago, it was a badge of honor to work for Google or for Microsoft or Amazon, any of the really Big Tech companies, because it was clearly acknowledged that they had very high hiring standards. But that sentiment has completely faded away.”
Tech is growing outside of Silicon Valley
The idea that the tech industry is synonymous with California has faded, too.
“There are a lot of cities that are gaining traction,” he said. “The benefit of being in California and what it does for your technology career has definitely diminished. We see trends where there is a very healthy amount of job postings in New York City, Philadelphia, Baltimore and Washington [DC]. That whole corridor is is very healthy from a technology perspective. There’s been no downtrend associated with the interest in technology in those cities.”
So, what kind of tech job is secure? While no job is ever 100% secure, right now there is relative security in big firms that aren’t tech firms but have large tech departments, and are not necessarily based in California.
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