Broad Jobs Picture Remains Strong While Tech Sector WeakensDespite the slowdown in the tech sector, there's still good news for job-seekers. The overall job market continues to look quite strong, with unemployment rates staying low at around 3.5% (as of March 2023). According to a survey from ZipRecruiter, most people who got laid off from tech jobs were able to find a new gig within a few months. Almost 40% of them even found a new role in less than a month. For former tech employees, the first step in figuring out what to do next often lays in the specific role they had. Estimates say that more than half of tech employees work in non-technical positions, like human resources or marketing. These employees can quite easily pivot to industries with those needs outside of tech. For those who were in technical positions, like software engineers and developers, they can also consider transferring their skills to other industries going through rapid digitalization in need of those skills - like finance, healthcare and manufacturing.
Sectors experiencing growthFormer tech workers may want to look towards industries that continue to grow despite the broader economic downturn. According to the most recent US Jobs Report, several sectors grew in 2023, including:
- Leisure and hospitality: Grew by 72,000 jobs
- Healthcare and social services: 50,800 jobs added
- Government: 47,000 jobs added
- Professional and business services: 39,000 jobs added
Can Smaller Businesses Attract Big Tech Talent?For small businesses and companies outside of the big tech world, now is the chance to land this top notch pool of talent. A recent survey found that today's workers prioritize work-life balance second only to compensation. So as more workers leave the tech industry, employers can cater to their desires by offering flexible schedules, remote work options, and other benefits that support a healthy work-life balance. Further, they'll also have to consider:
- Attractive pay and benefits: Smaller businesses can offer competitive salaries and benefits while also laying a path to equity ownership or company stock options as a means of incentivizing job candidates
- Professional development: Whether it be through presenting a clear career trajectory, a mentorship program or hands-on training, small businesses and startups can show candidates they are committed to their long-term growth and success.
- Culture and empowerment: Small businesses can attract top talent by offering an exciting, vibrant culture where workers are empowered to take ownership of their projects and responsibilities.
- Flexibility: As larger tech companies are being forced to navigate the work-from-anywhere conundrum, smaller businesses can present themselves as being far more flexible in terms of where employees choose to live. Not only does this perk look attractive to job seekers it also allows the company to choose from a much larger pool of candidates.
Laid Off Tech Workers Pivoting to Launching BusinessesMany workers appear to be landing on their feet with new opportunities quite quickly. But, many are rethinking their career paths and taking the time to launch their own businesses, taking the learnings from their jobs in tech. According to Economic Innovation Group, applications to form startups last year were the second highest they’ve ever been, and tech workers are adding to that trend. If you're interested in launching your own business, check out Lendstart's Step-by-Step Guide to Launching Your Own Business. At a high level, steps to take to launch your own business include:
- Write a business plan: In a business plan, you should consider the goal of your business, potential customers, your competition, realistic financial projections and how you plan to secure financing.
- Conduct market research: It’s important to know who your target audience or customer will be and why. It’s just as important to know who your competitors are and how you plan to differentiate from them. What are the prevailing industry trends that will impact your business today and in the future?
- Create a marketing strategy: Here you will think about areas like branding, advertising, your budget to do these things and identifying the voice that speaks best to the customer
- Secure Financing: In order to grow your business, make key hires and go to market, chances are, you'll have to secure funding. Interest rates have been on the rise and finding funding has become more of a challenge for founders looking to grow their business. Some financing strategies to consider:
- Individual investors: Are there people in your personal network (family, friends, colleagues) that believe in what you’re building and want to see you succeed? Consider if they are willing to invest in your startup with the opportunity for greater financial reward down the road.
- SBA loans: The federal government is surprisingly encouraging when it comes to helping entrepreneurs build their dream businesses. The Small Business Administration (SBA) loan program is a government business help initiative that provides financial assistance to small businesses in the United States. The SBA typically offers loans with low-interest rates and attractive repayment terms.
- Private business lenders: On the occasion that your business does not meet the eligibility requirements for a government loan or if you need additional funding, there are many private lenders that work with small, startup businesses. If a private loan is something you will need to consider as a newly minted business owner, be sure to completely understand any loan offer as they frequently come with stricter terms and higher interest rates.
ConclusionRecent job losses in the technology sector are a result of a slowdown in the industry’s growth and profit outlook. Companies are cutting costs and focusing on efficiency and unfortunately reducing headcount is part of that process. However, all is not lost for motivated workers and small businesses as these industry shifts can often lead to more promising long-term outcomes.