The big tech boom is over. But the sector as a whole is far from bankrupt.
This is recognition from business and community leaders in one of Seattle’s darkest days in tech history, home to Microsoft and Amazon.
Due to an uncertain economy, cooling customer demand and the need to increase focus on the most promising growth areas, the two tech giants are undergoing massive job cuts, reducing global and their respective headquarters. both affect employees.
For now, at least, technology leaders see the cuts as a rebalancing of power after a decade of significant growth for Microsoft, Amazon, and other big companies, rather than shrinking the industry.
Michael Schutzler, CEO of the Washington Technology Industry Association, said layoffs account for a “very low” percentage of total tech jobs. “Any tech employee who wants to work will find a new job soon,” he predicted.
But in the short term, cuts mean big changes.
Redmond, Washington-based Microsoft announced Wednesday morning that it will cut 10,000 jobs, about 5% of its workforce, including an initial 878 jobs in the Seattle area.
Microsoft CEO Satya Nadella wrote in a memo to employees: Microsoft announces cuts.
Meanwhile, Amazon on Wednesday began the latest phase of 18,000 layoffs, the largest in the company’s history, affecting sites including its Seattle headquarters.
Doug Herrington, CEO of Amazon Worldwide Stores, told employees in an email this morning that cuts in his division were difficult but a necessary response to the economic realities facing the company.
“Getting out of Covid this past year has been difficult. Costs have increased,” writes Herrington. From Amazon he is listed in an email provided to GeekWire.
In a notable coincidence, Microsoft and Amazon’s cuts include hardware and device layoffs. This is an area that has traditionally not been a strength in Seattle’s software-oriented tech community.
Facebook’s parent company Meta, Salesforce, Redfin, Qualtrics, and other publicly traded companies have likewise announced recent cuts that collectively affect thousands of Seattle-area employees. Smaller startups are also cutting staff.
“These cuts have a huge impact on our region,” says Margaret O’Mara, a technology historian, author, and professor at the University of Washington, citing the impact of technology adoption drawing large populations to the Seattle area. increase.
Behind the scenes, cutbacks are making big changes for tech workers and companies alike. Total compensation fell for the first time in a decade, according to Albert Squires, director of the technology practice at Seattle-based recruitment firm Fuel Talent. As a result, employers are put in a stronger position.
“Gone are the days when moving to a new job guaranteed a 30% raise,” says Squires.
Recruitment of Technicians Continues
However, many companies are still hiring tech-related positions.
- A search for tech jobs on Glassdoor brings up more than 5,000 posts, and recent research shows that most laid-off tech jobs find jobs within three months.
- Washington’s intelligence department added 1,000 workers in November, according to the state’s latest monthly employment report.
- As of November, there were an estimated 155,000 information workers in the Seattle area, up 8.1% from the previous year and up from about 90,000 a decade ago, according to Bureau of Labor Statistics data.
For some tech workers, layoffs have accelerated their shift away from big tech companies and into other companies’ tech businesses. For example, at JP Morgan’s downtown Seattle office at Chase, the number of technology engineering employees has grown by 100 over the past year to nearly 270.
With recent layoffs at major tech companies, JPMorgan Chase is seeing more resumes from engineering candidates than ever before. But it remains a highly competitive market given all the companies that continue to hire in the region, said Rao Lakkakula, his leader at financial services giant Seattle Tech Center.
“More and more people are looking at opportunities outside of big tech companies like Microsoft and Amazon,” he said.
Broadly speaking, the cuts reflect a big shift after the pandemic-era job boom.
Microsoft added about 80,000 jobs between 2019 and 2022. Amazon added 248,500 employees in 2020 alone (including warehouse workers). Meta, which has nearly 8,000 employees in the Seattle area, doubled its overall headcount since the start of the pandemic before announcing his 13% cuts in November.
O’Mara said Seattle has historically been a big business town, with periods of time dominated and defined by specific sectors and companies.
O’Mara said that if Amazon and Microsoft’s cuts were on the cutting edge of larger cuts, it would have a “huge physical and psychological impact” on Seattle’s tech ecosystem. Suburban technology company.
Cost-cutting measures and a shift to hybrid work policies are also changing the commercial real estate market in the region as companies such as Microsoft and Meta cut office space. If these trends continue, workers in dependent industries such as hospitality could be affected.
Washington state’s unemployment rate rose slightly in recent months, but remains at a historically low 4% in November, while employers added 13,100 jobs that month.
From a historical perspective, there are parallels between the dot-com bankruptcy and the recession that preceded it leading to a decline in tech jobs in the Seattle area, UW historian O’Mara said, adding that higher interest rates and a recession could lead to an economic slowdown. He said the metrics made it more difficult to raise capital. and cut the stock price.
But today’s tech industry is bigger and more deeply entrenched than ever before. Because the giant technology company provides the foundation for many other companies. According to O’Mara, revenue and market capitalization aren’t as “abnormally high” as they have been in recent years, but it’s still a very profitable sector.
History also suggests some encouraging signs. Past technology downturns have provided opportunities for new competitors to rise and challenge incumbents. Smaller companies may find it easier to hire technical talent. This could give a boost to Seattle’s growing startup scene, which is attracting huge amounts of venture capital money.
In one colorful anecdote from the 1970s, O’Mara points out that a group of fired Boeing engineers created the Thermarest mattress.
“The last boom brought a ton of talented people here who wanted to find a reason to stay,” she said of Seattle. “As a result, no one knows what will happen in her 2020s in the region.”
WTIA CEO Schutlzer said, “We have great faith in American ingenuity and we have great confidence in the region’s resilience.”
“We will bounce back,” he said, “stronger than ever.”