The Irish Times

Rightsizing in tech: A pandemic anomaly or longer-term correction?

Tech layoffs can result from various factors and it’s not always easy to attribute them to a single cause, says industry

Some companies in recent years were overvalued and spending beyond their means, which led to lay-offs. Photograph: iStock

Thu Dec 14 2023 - 05:00

Job losses across Big Tech were among the most notable features of 2023. Was this the result of over-hiring during the Covid pandemic or is it a sign of a longer-term correction? And what does this mean for Ireland, which has been heavily dependent on the industry for jobs growth and corporation tax revenue for many years? We speak to experts about the future of tech in Ireland.

The big question is: were the 2023 tech lay-offs the result of Covid, or signs of a longer-term correction? “Both,” says Claire Kelly, head of growth and partnerships at Sigmar Recruitment. “Generally in the Irish markets, you see an average tenure of two years. Unless someone is upskilled and shown career progression, they tend to become bored or complacent and look for other options. However, that attrition wasn’t happening, as people were thinking ‘If I leave now, other companies aren’t hiring’. So, there was a pent-up demand for people and companies started panic hiring. Then, salaries were very high, higher than the market average, because companies felt that’s what they needed to do to attract the right talent. It became unsustainable, and led to some of the lay-offs.”

There are companies in non-traditional industries that are adopting tech staff

—  laire Kelly, head of growth and partnerships at Sigmar Recruitment

In addition, there was the overvaluation of some companies that were also spending beyond their means, which also led to lay-offs, says Kelly. “Some companies were using the time as a way to slim down their workforce. Sometimes that happens, where companies restructure and they see they don’t have a need for the same roles or amount of staff and that leads to lay-offs.”

Tech lay-offs can result from various factors, and it’s not always easy to attribute them to a single cause, says Mark Jordan, chief strategy officer, Skillnet. “For sure there may have been over-hiring during the pandemic to satisfy businesses’ needs of pushing all business activity online, however, economic uncertainties, supply chain disruptions, and changes in consumer behaviour are equally as likely to affect lay-offs.”

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From our ongoing work and engagements with other business support agencies such as the IDA and EI and directly with Industry itself, we are cautiously optimistic with regard to the stability of the tech sector and the pipeline of tech investments in the coming months, says Jordan.

Kelly says it’s hard to say. “It’s a hard question to answer. I don’t know – it’s difficult to judge. The market seems to be normalising.”

There continues to be a high dependency on tech in the Irish market, but we are seeing an increase from other industries such as bio and pharma, says Kelly. “Other industries are growing in a way they wouldn’t have previously. Those affected by lay-offs have other options now.

Ireland is in a strong position as the only English-first nation in the EU, so remains a major tech player with high demand

“There are companies in non-traditional industries that are adopting tech staff. If you look at the IDA Ireland their stats are holding very strong for both inward investment and a growth for indigenous Irish companies.”

Jordan says now more than ever workforce development is centre stage for Ireland. “As the world of work continues to evolve, businesses need access to an agile, diverse, and talented workforce that is continuously acquiring and developing new skills so they can sustain their competitiveness.”

As a knowledge-based economy, our people are the key asset that will secure the future success of our businesses and national economic and social priorities, says Jordan. “We must continue to cultivate a world-class workforce that is technologically advanced and highly skilled to grasp the economic opportunities presented by high-tech innovation, digitalisation and the green transition, as well as to secure a steady stream of international investment.”

Overall, the market is quite strong says Kelly. “It’s not where it was last year, but overall it’s quite positive. There’s still continued growth and high demand. Tech is one of the industries that is most collaborative with colleges and universities so anyone at graduate or student level worried about finding a job, there’s a lot of demand, so don’t worry.” Ireland is in a strong position as the only English-first nation in the EU, so remains a major tech player with high demand.

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