Big Tech’s big boom is over. But the sector overall is a long way from a bust. That’s the assessment from business and community leaders on one of the gloomiest days in Seattle tech history.

Citing the uncertain economy, cooling customer demand and the need to sharpen their focus on the most promising areas for growth, both tech giants are moving ahead with major job cuts. For now, at least, tech leaders see in the cutbacks not a retrenchment for the industry but rather a rebalancing of power after a decade of remarkable growth for Microsoft, Amazon, and other big companies.

The number of layoffs as a percentage of total tech employment is “very low,” said Michael Schutzler, CEO of the Washington Technology Industry Association. “All those tech employees who want to work will find a new job quickly,” he predicted. In the short term, however, the cuts represent a major shakeup.

Facebook parent Meta, Salesforce, Redfin, Qualtrics, and other public companies likewise announced recent cuts that collectively impact thousands of employees in the Seattle region. Smaller startups are also trimming staff. “These cuts have a big impact on our region,” said Margaret O’Mara, a tech historian, author and University of Washington professor, citing the role of tech recruiting in expanding the Seattle area’s population.

Behind the scenes, the cutbacks are also causing significant changes for tech employees and companies. Total compensation recently dropped for the first time in a decade, said Albert Squires, director for the technology practice at Seattle-based recruiting firm Fuel Talent. Employers are in a stronger position as a result.

Tech hiring continues
However, many companies are still hiring for tech-related roles.

  • A search for tech jobs on Glassdoor shows more than 5,000 postings, and recent surveys show that most laid off tech workers are finding jobs within three months.
    Washington’s information sector added 8,700 workers in 2022, according to the state’s most recent monthly employment report. Overall private sector employment rose by 3.8%.
  • There were an estimated 155,000 information workers in the Seattle region as of November, a 8.1% increase from the prior year, and up from about 90,000 a decade earlier, according to data from the Bureau of Labor Statistics.
  • The Seattle area ranked as the best city for STEM professions, according to a new study published Wednesday by WalletHub.
  • For some tech workers, the cutbacks are accelerating a move away from big tech companies and into the tech operations of other businesses. At the downtown Seattle offices of JPMorgan Chase, for example, the technology engineering operations have grown by 100 employees to nearly 270 people in the past year.

A rebalancing of power
At a high level, the cutbacks reflect a major shift after a pandemic-era hiring boom.

Seattle has historically been a big-company town, with successive eras dominated and defined by certain sectors and companies, O’Mara said — Boeing in the 1950s and 1960s, Microsoft in the 1990s and 2000s, and Microsoft and Amazon in the past decade. O’Mara said if the cuts at Amazon and Microsoft are the leading edge of more big cutbacks, it will have a “huge impact, both materially and psychologically,” on the Seattle tech ecosystem, which also includes more than 100 engineering outposts established by out-of-town tech companies.

The cost-cutting measures and shift to hybrid work policies are also changing the region’s commercial real estate market, as Microsoft, Meta and others shed office space. If those trends continue, workers in dependent industries such as hospitality and other services sectors could feel the impact.

The Seattle-area unemployment rate increased slightly in recent months but remains historically low, at 3% in December.

From a historical perspective, there are parallels to the dot-com bust and earlier downturns that led to tech job reductions in the Seattle region, UW historian O’Mara said. But the tech industry today is bigger than ever and deeply entrenched, as large tech giants provide foundations for many other companies. The sector also remains hugely profitable — albeit not as “extraordinarily high” in revenues and market capitalization today as it was in recent years, O’Mara said.

History also suggests some silver linings. Past tech downturns provided an opportunity for new competitors to rise up and challenge incumbents. Smaller companies may have an easier time recruiting tech talent, which could boost Seattle’s growing startup scene that is still attracting gobs of venture capital dollars.

WTIA CEO Schutlzer said he has “high confidence in American ingenuity and higher confidence in the resilience of this region….We will bounce back,” he said, “stronger than ever.”

Source: MSN