Sky-Rocketing Tech Sector Layoffs, Yet Tech Leaders Remain Optimistic: A Mindsight Futures Report

 

July 21, 2020 by Siobhan Climer and Eric White

Back in late May, we analyzed Gartner’s report showing a significant drop in IT spending related to COVID-19. While budget cuts hit different industries and regions at varied speeds and impact, the results are disastrous for some. 

 

Number Of Tech Startup Employees Laid Off Between March – June 2020, By Industry

tech sector layoffs

While “tech startup” is slightly ambiguous, the takeaway – that tech employees across industries are seeing unprecedented layoffs – is indisputable. 

 

Tech Sector Layoffs Lead To Analyst Pessimism 

 

“Job openings in media, information technology, computer software and accounting and legal services have dropped,” according to the U.S. Labor Department’s July 2 report. 

The belief that technology investments can wait or that IT departments will just make do is likely part of this slow rebound. 

Fears that the recent upturn is due to a premature loosening of restrictions – and that another economic closure is imminent – are feeding these worries. 

Echoing job market pessimism – and reports that the jobs’ numbers fail to account for the millions now working reduced hours or who have stopped looking for work altogether – is Heidi Shierholz, a former Labor Department chief economist now at the Economic Policy Institute.

“This report may be a kind of high point … we may see we’re losing jobs in coming months,” said Shierholz. 

8% IT Spending Drop Tied To Covid-19, Gartner Reports: A CIO Report

 

Tech Leaders Claim Optimism (Barely) In Face Of Tech Sector Layoffs

 

Despite the petrifying alarm bells, IT research platform Pulse found that 51% of IT leaders expect IT budgets to increase through July or remain at levels set at the end of 2019, according to the Wall Street Journal. 

tech sector layoffs

What is feeding this optimism?

Andrew Bartels, Vice President and Principal Analyst at Forrester, noted that while many tech-centric industries (i.e. industrial products, social services, manufacturing, and transportation) are hard-hit by the pandemic, these industries may adapt with more agility than others where tech plays a less crucial role, namely leisure, entertainment, and retail. 

Bartels also notes that industries that represent the majority of US tech spending, namely government, financial services, insurance, utilities, telecom, and high-tech, are not yet feeling dramatic effects

 

Does Size Matter? The Impacts Of Tech Sector Layoffs Vary

 

Of the IT leaders surveyed by Pulse, 46% represented companies with more than 10,000 employees. This segmentation may partially account for the optimism as well. A late April report by the SMB Group foundthe smaller the company, the harder the hit.” 

Certainly, IT leaders of enterprise-level organizations appear to be taking the impacts of Covid-19 in stride:

“Covid-19 has validated investments we’ve made and are making in cloud services, distributed data services, cyber- and information security,” said Peter Settel, CTO of American Family Insurance, in an interview with the Wall Street Journal.  

Mindsight’s team of technology experts are ready to help you make strategic adjustments in the face of technology’s only constant. Contact us today. 

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Visit us at http://www.gomindsight.com.

About The Authors

Eric White is Chief Technology Officer and VP of Consulting Services at Mindsight. With over ten years of experience in information technology and leadership, Eric excels at implementing network and data center technologies, designing high-yield solutions for the business. Holding professional certifications from Microsoft, VMware, and EMC, as well as the Cisco CCNP, Eric is an expert at solving business realities with a client-centric focus that delivers.

Siobhan Climer writes about technology trends in education, healthcare, and business. With over a decade of experience communicating complex concepts around everything from cybersecurity to neuroscience, Siobhan is an expert at breaking down technical and scientific principles so that everyone takes away valuable insights. When she’s not writing tech, she’s reading and writing fantasy, hiking, and exploring the world with her twin daughters. Find her on twitter @techtalksio.

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