The exponential advance of technological innovation, often stated through Moore’s Law, sometimes gets confused with the growth and financial health of the technology sector itself. As metro areas from Seattle to Austin to Raleigh are pegged as “The Next Silicon Valley” and today’s hoodied tech barons are seemingly all but licensed to print money, it can be easy to assume that rapid expansion and hand-over-fist profits are a simple matter of course in tech. As we’ve witnessed in recent weeks, however, the industry is no different than any other – subject to developments within its space as well as the whims of the economy at large. Huge tech layoffs – either already in the books or in the offing – at Meta (previously Facebook), Amazon, Stripe, Lyft, Shopify and other tech stalwarts demonstrate what should already be well understood: Big Tech may have enjoyed a huge, decade-spanning run, but it is hardly invulnerable.
“The technology sector has a dynamic history of expansion and contraction,” economist Charles S. Gascon wrote for the Federal Reserve Bank of St. Louis, citing contractions in the tech space starting in 2001, and again in 2009. So what do the current cuts in the sector – including that of almost the entire contract workforce at Twitter – mean for the future of tech’s job market, and specifically the gig economy?
Manage Costs and React Faster
Although recent tech layoffs among pure technology companies have been undeniably severe, given what we know now, they shouldn’t come as a surprise. Driven by an eagerness to capitalize on a COVID-driven boom in demand, tech was as bold as – and frequently bolder than – any industry in its hiring. The current sector-wide downsizing is, in large part, a correction to that response.
But, additionally, tech organizations are beginning to recognize an opportunity. By trimming staff employees, these companies are making temporary sacrifices to become more flexible and efficient over time. Because salaried employees translate to greater costs (insurance benefits, paid vacation and unemployment taxes, etc.) and slower hiring and onboarding, more companies are turning to contingent labor in an effort to manage costs more efficiently and position themselves to react faster to changing economic conditions.
In its 2022 technology industry outlook, Deloitte presciently noted that tech leaders, following the patch-and-plug approach of the pandemic, now have an opportunity to “lay solid foundations for future innovation and growth.” That opportunity still exists – by leaning into a more robust contract workforce. “With more experience utilizing a hybrid workforce under their collective belts,” Deloitte notes, “tech companies will evolve their cultures, accelerate experimentation with collaboration solutions, and develop better approaches to managing tax implications.”
Contingent Labor: A Flexible Workforce
In the world of industry – and particularly within the technology space – what goes down almost unfailingly must come back up again. Even amid the current tech layoffs, most projections forecast healthy growth for the sector and more jobs becoming available over the long haul. But in the short term, the current influx of employee supply will outstrip any growth and demand. That means companies have an opportunity to target tech talent not previously available – at least not at reasonable pay – while focusing on bringing those prospects aboard as contract workers.
Why hire a coder for a full-time position, committing your organization to that employee for the foreseeable future, if the project demands only three months of work? As companies encounter the need to flex their workforce to accommodate new business or project demands, they can rely on an expanded pool of skilled, highly qualified contingent labor to fill their needs through a lower-risk work arrangement.
Whether you’re a tech business striving to grow a more agile workforce or a technology professional seeking opportunities in the industry, PeopleCaddie can help. Our proprietary platform and bustling talent network can help employers connect with contractors, and vice versa, to ensure a fit that benefits both a business and its workers.
Joining the contingent labor pool can be a great way to secure work quickly. See how PeopleCaddie’s talent cloud places knowledge workers in contingent labor positions every day.