Laid-off tech workers are increasingly moving into mainstream industries such as banking as they trade the excitement of startups for the stability of long-established companies in traditional sectors.
While tech companies scramble to cut staff to reduce costs, after swelling by as much as a third during the first years of the pandemic, many tech workers are now looking for opportunities outside the industry, despite its reputation for high compensation, fast-paced projects and intense work culture.
The result: Some of Canada’s largest companies are reaping the benefits in scooping up talented tech workers.
Spokespeople from Sun Life Financial Inc., KPMG, Magna International Inc., Walmart Canada WMT-N +0.93% increase and Enbridge Inc. ENB-T +0.20%increase, all said their companies are continuing to hire for tech positions. And Toronto-Dominion Bank, Canada’s second-largest bank, has hired more than 2,000 tech employees since the start of 2022.
“Unfortunately, tech companies have fallen on some tough times,” said Matt Cohen, managing partner of Ripple Ventures, a fund that leads early-stage investments in technology startups. “These people are now going to be gobbled up by the legacy business leaders who can take advantage of this pool.”
Tech companies headquartered in Canada have laid off about 7,800 workers since the beginning of 2022, according to website Layoffs.fyi, which tracks tech-sector layoffs globally. This includes Shopify, Skip the Dishes and Ritual, but not layoffs from major U.S.-based tech giants such as Amazon.com Inc. AMZN-Q +0.93% increase and Microsoft Corp. MSFT-Q +0.66% increase, which have not disclosed their exact Canadian layoff counts. More than 200,000 tech workers have been laid off globally since the beginning of 2023.
Tech talent is still in high demand – LinkedIn lists more than 13,000 job openings for “software engineer” in Canada. But experts say those who have been laid off are increasingly choosing to pivot away from Silicon Valley startups in search of job stability. Instead, they are filling positions at traditional industries such as banking, insurance, retail and utilities, where skills in the fields of cybersecurity, advanced data processing, e-commerce and artificial intelligence are in high demand.
For the past 10 years, favourable conditions for tech companies meant that employees were increasingly more likely to stay in the tech industry after a major layoff. The share who sought another job in a “big tech” company has steadily increased over time, from a low of 37 per cent in 2008 to a high of 51 per cent in the fall of 2022, according to the latest data from Revelio Labs, a work-force data company based in New York.
But in the past six months, that trend has been reversed in a significant way for the first time since the financial crash of 2008, said Revelio Labs senior economist Reyhan Ayas. As of February, just 49 per cent of tech employees stayed in the industry. While still a minor reversal, she said it suggests the beginning of a larger trend.
Sun Life’s chief information and technology officer, Laura Money, said the decline in competitive job offers has helped the insurer speed up its hiring process.
“We’re not seeing that same pressure on salaries that were very difficult to match,” Ms. Money said in an interview. Previously, employees leaving for tech companies reported they were getting an 80-per-cent raise, she said. “We’re not seeing that anymore.”
The bidding wars for talent have become less competitive as the allure of stock options and share grants has faded, said Mr. Cohen of Ripple Ventures.
“People are considering cash offers a lot more than equity portions as they look to feed their families,” he said. “Equity has been reduced in value somewhat.”
Less competitive offers, along with the slower rate of hiring at tech companies, have also contributed to a decline in Sun Life’s attrition rate. And the number of “rebound” employees – individuals who left Sun Life during the tech boom and are now returning – has been on the rise, Ms. Money said.
Brent Foster, vice-president of software engineering at TD Bank, rejoined the financial services sector last summer after a year in management at tech giant Amazon. While he was not part of a layoff, he left the tech sector just as a number of companies began to announce job cutbacks.
Mr. Foster, 38, decided to join a new tech division at TD Bank. He is based in Virginia but reports to the Canadian operations.
“Amazon is a fascinating place to work but it’s a different type of challenge than financial services,” he said. “Amazon can be a little bit more unpredictable because you don’t know what they might get into next. Financial services is a more predictable and stable environment but still allows someone to solve interesting tech challenges with a sense of security.”
Health insurer GreenShield has hired more than 100 tech workers over the past two years to staff the company’s new technology and mobile application business, said chief executive officer Zahid Salman.
“It is quite the effort to build a team from zero,” Mr. Salman said. “We certainly benefited from some of the layoffs that were happening in the broader tech space in Canada.”
The effects of the tech contraction have also made their way down to the university recruitment level.
The University of Waterloo, renowned for its technology programs, has witnessed a “softening” of recruitment from big tech companies this year, said Norah McRae, who leads the school’s co-operative and experiential education programs. McGill University’s career-planning department noted a similar decreased presence, said spokesperson Cynthia Lee.
But both schools said that student hiring by other large employers in fields such as banking, insurance and the public service has remained constant during the same time period.
Even with the challenges facing the tech industry, not everyone agrees that tech employees are all willing to make the jump to traditional sectors. While banks and government might offer the chance to work on artificial intelligence, blockchain technologies and the Internet of things, there are still too many other opportunities in the tech space to tempt employees to stay in the field rather than shifting to slower moving companies, said James Bowen, adjunct professor at the University of Ottawa’s Telfer School of Management.
“Tech people tend to be project driven. They go to where the cool projects are,” Prof. Bowen said.
Some may even decide to create their own paths. After mass layoffs, there often follows a wave of startups, as former employees seek funding for their own ventures, he said. “In about a year, we could see a real flowering of startup companies where the individuals left.”
Meanwhile, some tech employees who made the shift to larger companies – usually considered a more stable job choice – may find themselves still vulnerable. In Royal Bank of Canada’s most recent quarterly earnings call, chief executive officer Dave McKay said that the bank had competed aggressively for tech talent last year amid hiring shortages. Now, he said, it would have to cut back.
“We had to respond to that with aggressive hiring and anticipating high turnover rates persisting into the first half of 2023,” Mr. McKay said. “Well, that was not the case. Almost overnight, tech firms started laying off instead of hiring, and therefore attrition came off very rapidly. And honestly, we overshot by thousands of people.”
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The Globe and Mail, June 4, 2023