The balance of power is shifting in the tech industry

“The hiring … was out of the ordinary, paid off [salaries] that were probably too high or out of reach, where companies would hire four or five people for a sales role when they really only needed two,” said Bill McHargue, founder of recruiting firm Talent House based in San Francisco.

But the situation began to calm down as the tech industry and the economy in general were hit by the perfect storm of inflation, rising interest rates, fears of a recession and the war of Russia in Ukraine. A wave of tech companies that were hiring aggressively, netflix (NFLX) at Coinbase, announced layoffs in recent weeks. Many others are also taking action to cut costs, with Uber (UBER), Lyft (LYFT), Instantaneous (INSTANTANEOUS), Twitter (TWTR) and Apple (AAPL) all plan to slow down or suspend hiring.

“They’re not going to hire as many people, they’re going to do a lot more due diligence, this interview process is going to take a lot longer, the [compensation] going to get a little more flexible,” said McHargue, whose company primarily works with early stage startups.

“I think it’s back to realistic numbers,” he added, describing the current reduction as a return to pre-pandemic levels. “I think the correction was going to happen, it had to happen, now we just don’t know how long it’s going to be.”

For some tech workers, that could mean a boost — not just in the ease with which they can get well-paying jobs, but also in the influence they have on management to push for working conditions. specific work.

Experienced senior engineers at big tech companies may still have the edge in the job market, but the downturn may serve as a reality check for tech employees used to getting what they want, whether it’s pre-pandemic office perks or clashing with their corporate lords during the pandemic for the right to work how they want and where they want.

During the last decade’s tech boom, “competition for employees has created a Disney-esque set of experiences/expectations in high-tech companies,” wrote Bill Gurley, a prominent Silicon Venture capitalist. Valley, one of Uber’s early investors. Twitter feed. “For employees who have only known this world, the idea of ​​layoffs or cost cutting (or being asked to come into the office) is downright heresy,” he added.

Today, the billionaire CEOs of some of the biggest tech companies are beginning to take a tougher approach, which means employees must either train or leave, perhaps in an effort to encourage attritional layoffs. .

“In reality, there’s probably a bunch of people in the company who shouldn’t be here,” Meta CEO Mark Zuckerberg reportedly told employees during a Q&A session last week. “Part of my hope by raising expectations and having more aggressive goals, and just turning up the heat a little bit, is that I think some of you might decide this place isn’t for you. , and that self-selection is OK with me.” Meta did not respond to a request for comment from CNN Business.
Tesla CEO Elon Musk also issued an ultimatum last month – weeks before announcing layoffs – that workers who don’t come into the office at least 40 hours a week should leave the company, breaking with the current policies of many tech companies, including Twitter, which it agreed to acquire.
Returning to the office is one of the most burning issues that tech employers and employees have clashed over.

But the growth in worker activism spurred by the pandemic and employees’ willingness to advocate for themselves — including their level of comfort with being back in an office — might not be so easy to reverse overnight, according to Y-Vonne Hutchinson, founder of inclusion consultancy ReadySet.

“The demand for technology and knowledge workers is still global, and there’s still a shortage,” Hutchinson said. “So I think workers who don’t want to go back to that environment won’t.”

In fact, across the tech industry, the downturn could produce a more favorable outcome for tech employees fighting for the right to work remotely, according to Nicholas Bloom, professor of economics at the University of Stanford whose research focuses on workplace management issues.

“For some industries, like banking, a recession will give management more leverage to force employees back into the office. Technology seems to be going the other way,” Bloom said. “Right now, most tech companies give employees pretty much what they want, which is about two days a week in the office.”

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But the shift to remote work could end up being a double-edged sword for many American tech workers, especially in places like Silicon Valley, with the potential for companies to use it to further cut costs. .

“As we enter a recession, tech companies will tighten their belts by cutting office space and hiring cheaper workers outside major cities and overseas,” Bloom said, citing countries. such as India and Mexico as destinations for outsourced jobs.

Harley Lippman, CEO of tech staffing firm Genesis10, said one trend he sees starting to emerge is a greater tendency to hire contractors rather than permanent employees because of the flexibility it gives businesses. “The work still needs to be done,” he said.

Whatever form this ultimately takes, it’s clear that tech employees will have to prepare for a major course correction in their industry.

“We’ve seen applicants take offers and then not show up at the new company. Like, it happened,” McHargue said. “I don’t think we’re going to see that kind of thing.”