What Job Seekers Need to Know About the Hiring Freeze – Forbes Advisor

Nicole Lopez-Conti interviewed with a mid-sized tech company in May. After meeting with seven staff members, completing three rounds of interviews, submitting work samples and completing a project, the company informed her that it was no longer hiring for the role.

“It was a really frustrating and weird interaction from the beginning,” she says. Lopez-Conti estimates she spent about 16 hours preparing and participating in the interview process.

Despite reports of job growth across the country, Lopez-Conti isn’t the only candidate to hit a dead end. The tech industry has experienced a wave of hiring freezes over the past few months, with several major companies citing fears of an economic downturn.

According to Layoffs.fyi, a website that tracks layoffs in the tech industry, more than 65,900 tech workers have lost their jobs this year.

What’s Happening to Tech Jobs?

Many of the biggest names in tech have announced hiring freezes and layoffs, including the following:

• Coinbase announced it would freeze hiring on June 2, then announced less than two weeks later that it would lay off nearly 1,100 people.
• Google initially announced a hiring delay until the end of 2022, then announced a two-week hiring hiatus in July.
• Meta (formerly Facebook) plans to cut hiring new engineers by 30% by the end of 2022. CEO Mark Zuckerberg is also reported to have encouraged employees to consider leaving.
• Microsoft initially delayed hiring, then announced layoffs on July 12.
• Netflix laid off 150 employees in May and another 300 in June.
• Twitter began canceling job offers in May and laid off 30% of its talent acquisition team in July.
• Shopify cut 10% of its workforce on July 26.

Some companies even go so far as to rescind job offers after applicants accept. In an industry where many professionals rely on H1-B work visas, revoked offers could put tech workers’ residency at risk.

Hao Jia knows from personal experience.

Jia attended college in the US on a student visa and graduated in June with a degree in computer science. Back in April, he turned down an offer from Oracle to accept a role at Coinbase. But on June 2, Hao’s proposal was rescinded. He had 90 days to find a job or leave the U.S. Many job seekers only have 60 days.

Although social media platform TikTok laid off workers this summer as part of a restructuring plan, Jia managed to secure a position there as a software engineer. He started in August.

Are other industries experiencing layoffs?

LinkedIn’s latest workforce report found that several industries saw increased hiring in June, while hiring for tech workers fell 9.1% on a monthly basis.

According to Thomas Vick, regional director at employment consulting firm Robert Half, the problem is isolated to technology. “We see very few industries at this stage issuing hiring freezes or making layoffs,” he says.

“Cutbacks seem to be affecting growth stocks,” says Crunchbase News reporter Sofia Kuntara, “And they tend to be tech and tech-related companies.”

Several tech-adjacent companies have indeed announced layoffs in recent months, including Carvana in May and Tesla and Redfin in June. Ford also announced it is preparing to cut up to 8,000 jobs to focus on making electric vehicles.

And layoffs and hiring freezes may soon spread beyond the tech industry. Bloomberg reported in early August that Walmart plans to lay off 200 corporate employees in response to weakening consumer demand amid high inflation.

Why are there so many layoffs in the tech sector?

After the optimism for the tech industry in 2022, the concentration of layoffs in the tech sector may come as a surprise. Here’s what caused the reversal:

Previous over-hiring

In 2021, the mass resignation led some companies to hire reactive employees, and the big tech firms did not hold back. Vick says larger companies have over-hired due to high demand for technology projects amid an “extremely tight job market”.

In early 2022, Coinbase announced plans to triple the size of the company, and Facebook hired thousands of new employees as it transitioned to Meta. Both have since changed course.

“Tech companies tend to hire based on what they think they’ll need a quarter ahead, especially because talent is hard to find,” explains Nia Dragova, founder of Candor, a company that hosts one of the largest databases of technical salaries.

“When it became clear that the upcoming quarter was not looking good at all, everyone had to lower their expectations,” she says.

Economic decline

Big tech stocks fell and the Nasdaq, home to many big tech companies including Apple, Amazon and Alphabet, was down. While tech CEOs aren’t using the word “recession,” they’re dropping hints.

“If I had to bet, I’d say this might be one of the worst downturns we’ve seen in recent history,” Mark Zuckerberg said during a Q&A with employees.

Google CEO Sundar Pichai cited an “uncertain global economic outlook” as the reason for the hiring slowdown, and Coinbase’s Brian Armstrong said the company needed to cut back to “stay healthy during this economic downturn.”

For companies where job offers have been rescinded, this is a sign that the company’s economic outlook has changed significantly in a short period of a few weeks.

“Most companies try to prepare for the worst,” says Kuntara. “The macroeconomic environment has changed so rapidly from what it was last year, and companies want to make sure they can operate effectively during a downturn, however long it lasts.”

Read more: August stock market forecast

When will the layoffs in the tech sector stop?

Dragova says it would be optimistic to expect a turnaround before 2023. “We will see a lot of layoffs and, even worse, a lot of companies will fail,” she says. Dragova also expects tech workers’ wages to decline as more laid-off workers compete for open positions.

“Technology companies recover very slowly from a downturn because most are not profitable to begin with,” Dragova points out, citing the case of Amazon, which took roughly a decade to fully recover from the bursting of the dot-com bubble.

Are these the prerequisites for another dotcom boom? “It’s hard to say for sure, but both private and public tech companies saw their valuations jump last year,” says Kuntara. “And the higher you climb, the harder you can fall.”

Four tips for job seekers

Finding a tech job can seem daunting under these circumstances. Here’s what the experts recommend:

1. Try smaller businesses

“These layoffs are largely isolated to the larger tech companies,” Vick says. “What we’re seeing, especially among SMBs, is that the demand for tech talent remains strong and companies continue to struggle to attract and retain tech talent.”

2. Do your homework

Dragova recommends evaluating your prospects as an investor: “Read stock analyst reports, join the earnings call and ask tough interview questions.”

3. Think outside the box

“For some roles like recruitment, finding stable work will be very difficult in the coming year, so consider freelancing instead,” advises Dragova. “I would also encourage people to look beyond technology.” You may be able to apply your skills in an adjacent field.

4. Consider staying put

“If you have a stable job right now, it’s not a good time to move,” says Dragova.

If your company seems stable, it might be worth asking for a raise. If you do, be sure to follow negotiation tips, which includes doing your homework on compensation at similar companies.

But if your company has made layoffs, you may not have much leverage to negotiate a pay raise or pursue internal growth, at least not in the short term.

Read more: How the big resignation can help you land a great promotion

What to do if your job offer is cancelled

For those whose job offer has been revoked, you may be able to salvage the situation by asking your previous employer to reinstate you.

If the offer is rescinded after it has been signed by both parties, you can potentially mitigate the consequences in other ways.

If you can prove that the event caused you financial or emotional harm—due to relocation or unemployment, for example—you may have legal recourse against the company, depending on the laws in your state.

Alternatively, you can try to directly negotiate compensation with the company that withdrew the offer.