Tech Talent Turmoil
The 2023 tech layoffs are our opportunity to re-examine hiring approaches altogether
Last week, we heard more news of companies joining in the 2023 tech layoffs. Zoom let go of 15% of its workforce, and Yahoo laid off 20%. More than 100,000 global tech sector workers have been laid off since the start of 2023; and at this rate, we’re expected to surpass the 2022 tech layoffs very soon.
It was somewhat reasonable back in 2021 for companies to share in the notion that bulk hiring was their opportunity to scale up quickly, reach their metrics, and ultimately beat out their competition. But what we’ve collectively failed to remember is that at the end of the day, any business, big or small, is built to make profit. Keeping costs under control is a huge part of the equation, and as we know, payroll for the engineering team is the biggest cost for any tech company.
So what else are tech companies supposed to do when they will always rely so heavily on talent to build competitive products?
The answer lies in re-thinking their hiring approaches and revisiting more cost-effective talent markets that can provide them with the same level of skill and talent.
Cost-effective and remote talent hubs are still being overlooked
Latin America is a growing tech hub home to tech talent at much more affordable rates. US-based tech companies have been taking advantage of sourcing skilled talent from this market for several years already, saving between 30-40% on base salaries while hiring professionals with the same level of education and English proficiency as their North American counterparts. Why Canadian tech companies are still not taking full advantage of this market continues to surprise me.
I recently worked with a client in the data analytics space through my work at DevEngine. The client is one of the fastest growing in Canada, scaling from 5 to 70 employees in just 1.5 years. They came to us in search of data engineering and data architecture talent and in hopes of avoiding the price of this talent in the Canadian market.
To put it all into context, Data Engineers in Canada can cost companies between $145,000 – $165,000 CAD in base salary alone, not including benefits and the recruitment costs of placing this talent.
But by being open to exploring talent options in Latin America, the company was able to hire for these positions, spending between $115-125,000 CAD all-inclusive (including benefits and all associated hiring fees). They didn’t have to sacrifice at all when it came to their level of education, job experience, and English proficiency.
Hiring contractors brings the flexibility to scale up or down
Not only were we able to save this budget-sensitive company a solid 25-30% on costs, but by choosing to hire contractors rather than full-time workers for its positions, the company now has the flexibility to scale up or down within 2-3 weeks as priorities change. They also avoid the recurring cost of having large HR/recruitment teams.
Working with a talent agency minimizes recruitment costs
Lastly, by working with a talent agency instead of handling recruitment in-house, the client also avoided having to pay for all the hiring costs and precious HR time associated with hiring the right candidate (we all know how long finding and placing the perfect candidate can take).
Companies that work with talent agencies enjoy the benefit of knowing exactly how much recruitment is going to cost them, and only incurring the cost once the hire is complete. This is yet again another huge cost-saving opportunity.
This client story is just one example of a tech company that is succeeding with its business margins by adjusting its hiring approaches to be more cost-effective.
The lesson here?
Growing a customer base and meeting revenue goals is certainly important for competitive advantage, but having healthy margins will always be the #1 thing needed for any business to survive.
Tech companies looking to avoid talent layoffs in the future need to start exploring more cost-effective and diverse talent options that not only cost them less, but give them the flexibility to scale up and down as needed when matters change, and help them avoid having to make massive layoffs in the future.
Whether you’re a large or small tech company looking for ways you can save on the cost of your talent, please get in touch with me and I’d be happy to show you some cost comparisons for positions you’re looking to fill and discuss how we can help you so you never have to worry making the news for more tech layoffs.