IT Career Guide

Putting Tech Layoffs in Context

Putting Tech Layoffs in Context: Startups and the Need for Agile Workforces

While the global coronavirus pandemic seems to have died down, it continues to affect daily life. It has taken jobs as fast as it has created them, leading to the persisting tech layoff season.

What caused the tech sector job cuts was that the Big Tech companies set the tone. These supposedly immutable entities have led to the layoff of professionals en masse. Facebook, Google, Amazon, and IBM are some of the largest names among the 883 tech organizations that have collectively laid off 164,411 employees in 2022 and 221,655 in 2023 so far, according to online tracker Layoffs.fyi.

Most reports leave out how this unfortunate trend has created a new surge. This article will attempt to contextualize how startup culture and modular technology through agile methodology have enjoyed a newfound interest in this climate.

Putting the Layoffs in Context: Streamlining, Efficiency, Agility

While the pandemic has spurred technological advancements, the industry has faced a slowdown and a decline in new cases. Helping businesses transition to remote work, connecting places in lockdown, or accelerating new product development have all pushed tech companies to hire more professionals.

Case in point: For Amazon, the lockdowns meant people had no access to grocery stores. They had to resort to online shopping as a more secure and convenient option. To meet this demand, Amazon launched a hiring spree of about 175,000 temporary workers during the first part of the pandemic. They even offered an added $2 per hour and increased overtime pay, the New York Times reported.

Now that the worst pandemic is over, so is the so-called bubble. Companies are returning to the office, and people are going out again. It also meant tech and new product development projects slowed down.

Paired with an accelerated dominance of artificial intelligence (AI), the tech sector, in general, is bracing for new technological trends. As Google CEO Sundar Pichai puts it, “…we hired for a different economic reality than the one we face today.”

Regardless of the press releases and the internal communications, the point is that tech companies are realigning their resources and preparing themselves for the new future ahead.

How Agile Methodology Fits into the Picture

Agile methodology refers to a set of practices and strategies that focus on smaller teams that are self-organizing and cross-functional. Imagine small cells focused on specialized tasks. This arrangement works in tandem with a method of project management that breaks down tasks into manageable chunks.

Each phase is a sprint, expected to be completed in short, highly productive timeframes. Teams then look back, reflect, and create a new iteration based on identified gaps and opportunities.

Although the agile methodology has existed for some time, it is typically only applied to software development projects and is seen as a novelization. At a time of realignment and increased efficiency, the use of small, focused teams in an interactive project approach sounds ideal all of a sudden.

Online recruitment platform Zippia reported that at least 71% of US companies are now adopting agile methodologies in varying capacities. It has also caused a shift in the certifications preferred by employers.

How the Tech Layoffs Affect the Startup Space

After the massive job cuts, one resounding question is: “Where do the laid-off employees go?” While there is no singular answer, many tech professionals have decided to start their own enterprises.

Creatively called “revenge startups” in a Wall Street Journal report, laid-off professionals are opening their firms. And these are not just people taking matters into their own hands. The WSJ also reports that venture capital investors, who used to prefer founders and executives leaving their pedestals to launch their enterprises, are now entertaining a wider variety of tech founders.

For example, startup accelerator Y Combinator reported over 20,000 applications for the Winter 2023 season, only funding 282. The number of applications to launch new businesses shot up by 20%.

A survey by Clarify Capital LLC of 1,000 tech workers affected by the job cuts revealed several key insights about this particular segment. First, 63% of the respondents started their own companies after the layoff, with 58% of these new founders feeling better regarding job security.

More importantly, the Clarify survey showed that those who launched their startups enjoyed an average salary increase of $13K annually.

While there have been more startup applications due to the tech layoffs, several scandals have hampered the venture capital aspect. Unusual business practices have tainted promising unicorns such as WeWork and Theranos. These issues have forced venture capitalists to investigate and implement stricter measures before putting out those coveted startup funds.

With venture capital money declining, startups have turned to platforms like StartEngine to raise funds. Unlike traditional venture capitalists, StartEngine connects retail investors with early-stage startups and pre-IPO firms. 

The Advantages of Agile-Powered Startups

One apparent similarity between agile teams and startups is their size. Coming off of monolithic Big Tech companies, tech professionals starting their own teams benefit greatly from trying out upcoming management and delivery strategies.

A 2021 report from software developer Digital.ai shows that agile has been spreading to traditional business departments. This spells a larger use of the project management methodology beyond the 86% of software development teams already adopting agile.

If you’re looking to transition, whether as an existing Agile professional or an IT career shifter, here are a few ways agile methodology serves the startup culture.

Easy Integration

Now that the world is moving away from the misconception that agile is only for software development, more businesses appreciate its value. At its core, agile espouses quick responses to changes, making it ideal for the dynamic nature expected from startups.

Customers and investors can simply watch as every iteration of a business phase is delivered. The short delivery cycles, feedback, and realignment ensure that every forward step meets every expectation.

If a business target changes, expectations can be applied to the next iteration, making interoperability a non-issue.

Faster Turnaround Times

Short, highly productive bursts characterize every stage of an agile team’s work. In practice, this means involving relevant parties at each stage to solve any problems. 

In a traditional waterfall approach, a project progresses linearly. In most cases, only the final product undergoes inspection, allowing errors or inconsistencies to cascade down the development process before being identified, making them harder to resolve and taking longer.

Encourages Feedback and Constructive Criticism

In an agile endeavor, customer feedback is given greater gravitas. In actuality, they participate in every iteration the team produces rather than waiting for a finished product. Applying the scenario to a startup, investors and customers see the new company’s progress, allowing them to provide valuable input before proceeding any further.

Improves Cross-Functional Coordination

Like any startup company, agile projects require small and specialized teams dedicated to a specific task. Adopting this project management approach requires regular communication between department heads and individual members.

Phases are typically smaller projects, so members’ updates will be more frequent. This scenario extends to the relationship between startups, investors, and customers.

Enjoy Massive Scalability

Startups are hungry for growth and are generally poised to do it. One challenge is determining whether they can scale their business to meet those growing demands. With the help of the agile methodology, projects can produce results more quickly. Every time there’s a change in requirements, it can be immediately implemented.

Similarly, an agile mindset teaches professionals to prioritize tasks. The most critical requirements are generally addressed first, which minimizes the impact and disruption of unmet objectives.

The Bottom Line

As the pandemic changed the landscape of the tech industry when it began, so it did when it died down. While the massive tech layoffs have displaced hundreds of thousands of professionals, they have also spurred growth in other areas of the same industry.

Since companies are refocusing their efforts, keep up with the trends and stay in demand with Yellow Tail Tech. Our programs are designed to help even those with little to no experience successfully transition into the tech sector. Book a 10-minute intro call with an Enrollment Advisor now and see what career prospects suit you.

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Silvana Zapanta

Sil brings a wealth of experience to her writing and editing projects. After nearly a decade guiding college students in research and communication, she shifted her focus to freelance writing and editing. Her passion for education continues through volunteer work, where she empowers others by teaching research and writing skills.

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