Technology Sector Layoffs – An Opportunity to Hire Top-Tier Talent
In Sequoia’s Adapt to Endure deck, the firm quotes the late, great Formula 1 driver, Ayrton Senna. “You cannot overtake 15 cars in sunny weather…. but you can when it’s raining.”
After record-breaking years for the tech sector in North America, a wave of layoffs and hiring freezes have hit the U.S. More than 15,000 tech employees lost their jobs in May 2022. June is following the same trend. Tech giants have cut jobs and announced hiring freezes in anticipation of what many predict will be a lengthy slump. Hiring freezes and layoffs are occurring across the board with no company immune. Even tech companies that once enjoyed pandemic related growth are facing a downturn due to inflation, over-hiring during periods of rapid growth, economic distress, changes in consumer tastes, and the great VC pullback.
On this side of the border, two other market forces have plagued the Canadian talent market. In 2021, the Great Resignation saw much Canadian talent voluntarily resign, with many heading to Silicon Valley’s greener pastures. Canadian workforce growth also slowed, brought on by pandemic-related immigration freezes. Since then, hiring tech talent in Canada has been difficult, if not impossible.
But there is opportunity ahead, especially for Canadian startups. The question is… do we see it?
Companies will protect their capital and more layoffs are likely. As recently as this month, Wealthsimple became the latest to turn their hiring freeze into layoffs, flooding the market with incredible tech talent. We may even see a surplus of talent coming back to the Canadian market.
Through every economic cycle, there are companies that survive and companies that don’t. Seed and pre-seed stage startups are generally the most recession-proof area of venture, because these companies are at least 6-10 years away from any meaningful exit. No one can predict market conditions that far out. For Canadian startups, the next 18 months will present an opening.
While the times require discipline and cash preservation, the hiring market is about to turn from an employee’s market, to an employer’s market. Canadian startups will have the luxury of acquiring talent that it otherwise couldn’t afford or access and is poised to compete with industry giants.
It’s easy to forget that some of the biggest tech giants in the world were founded or forged during troubling times. Economic downturns separate the startups with good fundamentals from the rest. For these startups, talent acquisition is about to get a whole lot easier.
Smart and savvy startups will look at this economic cycle as a chance to ‘break from the pack’ by kickstarting their hiring, focusing on Canadian talent, and rethinking their workplace policies to meet the ideals of the modern employee.
The team at MT>Ventures is excited to see how the Canadian technology sector evolves to meet these latest challenges. Reach out to discuss further at [email protected].