How Will Big Tech Lay-offs Impact IT in SMEs in the USA

January 31, 2023

How Will Big Tech Lay-offs Impact IT in SMEs in the USA

Big Tech lay-offs have been making big headline news the past few months with over 150,000 people in IT losing jobs in 2022. On an individual level that’s a lot of gut-wrenching human stories of people’s lives being turned upside down, particularly thousands of people in the tech industry that are living in the USA on temporary H1 VISAS, sometimes for years and sometimes with children born as American citizens, and now finding themselves with just 60 days to find a job or they need to leave the country taking their American children with them.

On a more macro level, some companies might be hoping that the layoffs reduce the heat in the job market where demand has been outstripping supply and pushing up salary levels of software developers for several years already in a way that’s making it very difficult for SMEs to recruit.

Others are reconsidering their budgets after being spooked by the intense layoffs by bigger companies and the fear of recession.

Making business decisions based on either of these assumptions could be a mistake. Firstly, in the very same paragraph of the blog post where Satya Nadella announced layoffs of 10,000 at Microsoft this year he also stated “It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas.” Furthermore, the headline number of 10,000 roles are being eliminated over 3 quarters and represents less than 5% of the total workforce. It’s also unclear how many of the staff reductions will be in tech roles such as software developers, data science engineers, DevOps, etc, or other business areas and since they will continue to hire the impact could be much less than 10,000 people anyway. The picture is similar in other, but not all, headline-making announcements that have been made in recent months.

Of the net computer and information technology experts that have lost their jobs from these headline-making announcements we can’t be sure how many will stay on the job market. A disproportionate number of tech roles in these big tech companies are working with temporary H1 VISAS and they only have 60 days to find another job or they need to leave the country. Others might choose retirement.

Will supply catch up with demand?

According to the US Bureau of Labor Statistics, the number of people working in IT occupations is expected to rise by 15% from 2021 to 2031. Factoring in people leaving the industry permanently through retirement or other reasons they expect 418,500 new positions to be created each year for the next 8 years. In 2019/2020 less than 100,000 students graduated from US colleges with computer science bachelor's degrees.

As can be seen, the numbers don’t add up even with the big layoffs currently being made by big tech companies.

Demand will continue to outstrip supply which means that SMEs will need to get creative in how they will staff their IT departments with the talent and expertise they need to succeed with their digital transformation strategies.

One way to do this is by using a staff augmentation strategy with strategic partners such as Global Triangles. In our 2022 client survey, 100% said that we’ve been very successful in providing appropriately skilled staff to fill the skill gap with 83% of those saying that we have been extremely successful.

Should you make budget cuts in IT in anticipation of a recession in 2023?

Making IT budget cuts based on news headlines about big staff cuts being made by large tech companies could be a mistake. Every company needs to assess individual needs to meet their goals, none of us are getting a good insight into the strategies of Microsoft, Google, etc from news websites. We are only being shown one side of the coin and anyway, their strategy isn’t yours. A recent survey by Accenture found that out of 797 executives surveyed in North America 73% expected to accelerate reinvention strategies even in the face of recession during 2023 due to other external factors such as the pace of technology innovation and changing consumer preferences.

Now is not the time to scale back Digital Transformation strategies, it’s just more important to be smarter about how you do it, how you prioritize, and getting better value for money from your investment.

In our recent client survey, 100% of Global Triangles clients said that they’re very satisfied with the service they receive from Global Triangles and 100% also said that they found Global Triangles to be better value for money than direct hires or similar service providers. 100% are extremely likely to recommend Global Triangles to peers.

Many companies are starting to see the benefits of staff augmentation services provided by companies such as Global Triangles and integrate augmented staff into their IT teams. Besides being cost-effective and flexible, staff augmentation gives you easy access to a skilled workforce that’s still hard to find despite what the headlines say.


2022 Lay-offs & H1 VISA issues

Satya Nadella quote

Demand for people working in IT occupations

2019/2020 Computer Sciences Graduates

Accenture research

Other News

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