Breaking the Layoff-Rehire Cycle
We’ve all seen the headlines. The biggest names in technology have announced massive layoffs over the past few months — and they're not alone. In the first month of 2023, layoffs.fyi tracked more than 75,000 people getting laid off in the tech sector alone. That’s nearly half of the total the site tracked for all of 2022.
Relative to the hiring spree that happened in the latter half of 2020 through 2022, when the tech sector added hundreds of thousands of jobs, it might seem low in comparison. That’s little comfort if you’re one of the people affected by this change.
It’s difficult to understand the magnitude of the change in staffing when the largest software companies in the world depend heavily on outsourced and contract labor.
There will always be layoffs: roles change, companies change, markets change. But technology markets in particular are highly sensitive to boom and bust cycles. The issue today, however, is the way these cycles are managed; layoffs seem to be the norm.
But with so many other viable options on the table, it shouldn’t work like that, especially considering the structural labor shortages impacting nearly all sectors.
Thousands of Layoffs, Thousands of Open Jobs
What's interesting in the current wave of labor downsizing at tech companies is the dichotomy of cost-cutting measures vs. available capital.
Microsoft is a great example. The company announced it was laying off 10,000 employees, adding to the panic in already panicked markets. Just a few days later, the company announced a $10 billion dollar investment in OpenAI.
Microsoft isn’t scraping by like a mom-and-pop grocery store in a small town. It has plenty of money to invest in long-term bets, even as market uncertainty dictates its actions today.
That context is important because not only did Microsoft lay off 10,000 people, it also still lists nearly 800 open positions on its website. You might assume these are hard-to-fill specialty positions, but you’ll find them to be quite ordinary for a tech company of this size: sales and marketing positions, product and program managers, and developers.
Microsoft isn’t the only one in this situation, of course. Meta and Google both have 700 and nearly 1,000 open positions, respectively. Amazon has tried to obfuscate the number of jobs open on its site, but by my rough calculation, it has over 3,000 open positions as well.
Why are they doing this? Hiring is expensive and takes time — valuable time away from productivity. Then, there's onboarding; getting a new person up to speed takes months. If you already have people in your massive organization who can do these jobs, and most of them do, wouldn't it make more sense to reallocate them appropriately?
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Navigating the Skills Gap and Talent Shortage
This reactive layoff-rehire cycle needs to change. If you believe some of the smartest economists in the world, talent and skills shortages are not an illusion. You can lay off thousands of people with the best-composed email in the world, but you can’t rehire people as easily.
The largest tech companies in the world are wildly profitable (even if Wall Street might differ). They have alternatives to layoffs, including opting for developing training content to help them reskill and upskill existing employees.
Microsoft, particularly, should know better. At the beginning of 2023, the company released new research conducted with Boston Consulting Group demonstrating how organizations can overcome persistent skills gaps and talent shortages by promoting internal training and creating homegrown skill competencies.
The skills gap is widening, and it's up to companies to train their employees to develop the skills they'll need in the future. And there are tons of resources to help.
Internal mobility programs like Worqdrive are available to help companies redeploy talent. Learning content from providers like Udemy and Coursera are ubiquitous and available for easy consumption. Others like SkillCycle are taking a longer-term approach to bridge the divide between existing and new skills.
Related Article: Where's the Technology to Address Internal Mobility Needs?
The Value of Reskilling and Internal Mobility
Ultimately, shareholder perception about the value and deployment of layoffs also has to change. Once seen as an easy way to shed costs, layoffs should no longer be the go-to solution. Organizations must do a better job of prioritizing and pivoting people into new roles as the economic landscape changes.
We have to see redeploying 1,000 people into open jobs as much more valuable than laying off those same 1,000 people. Because saving thousands in severance, recruiting and onboarding costs has to account for something. It's time companies and shareholders understood that reskilling, upskilling and talent mobility make the type of fiscal impact that layoffs have been positioned to achieve for decades.
About the Author
Lance Haun is a leadership and technology columnist for Reworked. He has spent nearly 20 years researching and writing about HR, work and technology.