Big Tech, the collective name for the world’s largest and most influential technology companies, is widely thought to include Apple, Amazon, Google, Meta (previously Facebook), and Microsoft, with some additionally including Twitter, Netflix, and Tesla. These companies, which have always been highly successful and have experienced massive and rapid development in the last decade, are suddenly preparing for a moment of transition. The economic reality is now evident.
We’ve all seen the headlines. In an uncertain business climate, employers in the technology sector, from startups to large corporations, are looking for ways to save expenses.
According to reports from Big Tech businesses, recruiting is slowing and, in some cases, even ceasing, and profits are falling across the board in what is typically one of the most profitable industries on the planet. From small to big to large — no one is immune. Keep reading to learn more about the tech slowdown, its causes, and its impacts.
Causes of the Downturn
Many issues have lately impacted the sector, including global economic constraints generated by the Ukrainian war and subsequent sanctions and hostilities with Russia, which have pushed up the price of oil and products and created a cost-of-living crisis. Rising expenses directly impact businesses, as they see their overheads rise and customers’ purchasing power decrease, affecting sales income. Recent data, for example, suggests that there has been a significant decrease in online advertising sales, particularly on social media, which is presenting problems for both Meta and Google. According to Magna, the US digital ad market will grow by only 11% in the second quarter of 2022, compared to 58% in the same period last year.
Another point of view is that this ‘downturn’ is simply a return to more ‘normal’ times. Big Tech businesses had remarkable growth during the lockdowns as everything went online, making them one of the few industries to benefit from the pandemic. To meet customer demand, these companies increased hiring, and investors raced to get a piece of the action. However, as the world returned to normalcy, there was always going to be a leveling off of growth in the IT industry, with people having the option to shop, socialize, and interact offline again.
Is There a Positive Side to the Turndown?
As strange as it may sound, the Big Tech slowdown may have an unexpected benefit. Many organizations have struggled with recruiting and retention in recent years, with many more jobs available than individuals to fill them, resulting in employee shortages and skill gaps. Perhaps a slowing in recruitment in Big Tech, with repercussions for smaller tech firms and other industries, could help ease the war for talent by making more tech professionals available, rebalancing the recruitment sector, and giving employers some control over the recruitment process and retention of good employees.
Big Tech may be in for a tough ride in the coming months, but based on the results so far, it appears they will be able to survive and perhaps even emerge as more efficient organizations than before.
If you want to prepare for the approaching downturn, visit my website and connect with a lot of like-minded people to devise a plan to get through this period of slowdown.