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Tech talent is still in demand but huge salaries are disappearing

Thomas Barwick | digital vision | Getty Images

A slumping stock market, and the punishment for tech companies in particular, is preparing to reshape pay packages despite continued strong demand for tech talent.

Every day brings a new wave of stock falls, hiring freezes and slowdowns, or layoffs from companies that a year ago couldn’t hire people fast enough. earlier this week, spotify CEO Daniel Eck sent an email to employees explaining that the company is. Hiring slowed by 25%. Cryptocurrency exchange Queen Piece announced that it was Cut 18% of its workforce. During the past month, stitch repair cut 330 jobs, It represents 15% of its employeesInc. buy-now-pay-later Klarna has laid off 10% of its global workforce.

These companies, and many others in tech, have grown their headcount rapidly during the pandemic, but now they Cessation or downsizing of their workforce High inflation and economic uncertainty threaten growth. And while overall demand for tech talent remains strong — during the first quarter, US employers announced 1.1 million tech jobs, a 43% increase from the previous year, according to IT trade group CompTIA — the way in which the By organizing weighted bonus packages. to change.

For start-ups and small businesses, expect to see more in the way of equity and less cash in job offers as these companies look to save money in tough times, says Thanh Nguyen, founder and CEO of OpenComp that measures compensation.

He says startups — which until recently were willing to pay 15% to 30% more to get the right candidate — are beginning to focus on keeping their own money, especially if the previous funding round was more than six months old.

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“What we are starting to see now is that early stage companies are becoming less aggressive with cash and more serious about taking equity for job offers because the liquidity burn is critical now,” he adds.

While mixing cash and stock has long been a practice of pay packets in technology, this equation has become a bit suspicious. Companies that issued shares at their peak to entice employees to board now find these shares to be worth much less.

“Either there will be a massive amount of employee churn or a huge loss because companies will have to cancel and reissue those shares that are still under water, or reissue them and cause dilution to keep talent on board,” Nguyen said.

In May, Brex co-founder and CEO Henrique Dubugras said that The company’s bid is $250 million It was a way to give employees “some cash to weather this storm”.

Big public companies like Apple, Meta, and Google are caught up in this same dilemma. Nguyen believes there will be huge repercussions for these heavyweight companies that had massive hiring practices with stock grants when stock prices were rising. “We’ll start to see the implications of that starting with the third-quarter earnings reports,” he says.

“The big gorilla in the room”

The continued strength in technology employment will not disappear, but it is likely to diminish. People with AI, data, web 3 and cloud engineering skills will continue to find opportunities, says Nicola Morini Bianzino, EY’s chief technology officer, calling them talent that can take “businesses to the next level”.

Nguyen adds that individuals with these skills “are highly regarded and will be able to demand a great deal of liquidity and equity”.

Technologists such as those in sales, operations, or marketing are more likely to feel pain. “As people were scrolling around it, rewards increased by 10% to 15% across the board,” he says. In recessions, he adds, labor costs will begin to stabilize, and people are more likely to stay in their jobs for longer.

“Economic stagnation is the big gorilla in the room,” says Nguyen. “It has a huge impact on whether people stay in their jobs or leave,” Nguyen adds.

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