So now we know: Ireland’s tech giants do indeed feel chill economic winds.
oogle just announced a temporary recruitment freeze, here and everywhere else, and is “slowing hiring for the rest of the year”.
Microsoft says it is eliminating many of its open jobs, including in its prized cloud business.
Meanwhile, Meta is to hire fewer people than planned, with CEO Mark Zuckerberg actively encouraging some workers to leave the company.
Even Apple is reportedly planning a slowdown in hiring.
In other words, some of Ireland’s biggest tech employers are scaling their plans back.
Is the party over? In a week that saw interest rates rise by more than expected, is it time to brace ourselves for a tech recession? If that comes, will our indigenous tech sector be any more resilient?
Some context is important here. While the job scalebacks from Google, Microsoft and Meta are generally applicable to global offices, recruitment dynamics aren’t always identical in headquarters and regional offices.
The US and European markets, for example, are often in slightly different phases of growth or recession. Europe, in general, is at an earlier stage of digital development than the US. This is especially true for things such as e-commerce.
So giants such as TikTok (increasing its workforce from 2,000 to 3,000 in Dublin) and Intel (1,600 jobs as part of a plant expansion) say that it’s business as usual here as they bet on future consumption.
Roles are different, too. While Apple frequently expands or cuts teams for new areas it’s investigating, such as cars, this typically occurs in and around its top-level headquarters in the US. Its work in Cork, which centres on logistics, support, finance and other functions, has proven so far to be not as vulnerable. Google and Meta are similar, insofar as much of their work is the machinery of delivering existing services, rather than the design of new ones.
Combined, it’s possible that this may mean Europe doesn’t experience the same round of belt-tightening currently being predicted for US tech enterprises. Then again, we may see some of it, too.
We know that Twitter and Spotify — a European company — have also reduced their hiring plans.
Pessimism hasn’t yet reached the point where anyone is talking about mass layoffs, a still unthinkable stage for the tech sector.
But it is starting to gnaw at smaller tech employers down the food chain.
So far this year, the amount of venture funding, worldwide, for tech companies has fallen drastically.
Analytics firm CB Insights recorded a 23pc drop in funding, the worst in years. Worst hit are the big Series D rounds, which typically exceed $50m or $100m. They were down 43pc. This isn’t a surprise, with blue chip VC funds such as Sequoia warning about it for months.
Ireland has some cushion here, mainly thanks to a handful of large funds that recently closed, including ACT and others.
The point of a venture capital fund is that it generally has to
be spent to provide a return for its backers.
That should mean a baseline of cash for startups and companies that will keep an ecosystem at least partially fed.
Public cash, such as the European Investment Fund’s €90m Irish
Innovation Seed Fund, also won’t hurt.
But our increasing reliance on international venture capital cash to fund our tech ecosystem could come into focus here, too. Recent figures from the Irish Venture Capital Association showed that the share of venture funding from abroad reached an all-time high of 79pc earlier this year, buttressed by a few big individual deals. With that cash seemingly receding, and an interest rate hike from the European Central Bank providing an alternative outlet for some of it, it’s hard to see that Ireland won’t feel the want of it in some quarters.
“VC funding stages are a capital supply chain and the bullwhip effect will be felt throughout the chain eventually,” said Frontline partner Stephen McIntyre on the topic recently, adding that it might be firms seeking a Series A or Series B round, rather than those at seed stage, that will see any immediate effects.
One thing that is peculiar to this potential downturn is the lack of concern about it. Either policymakers don’t think there’s any real threat to the tech industry here, or it’s not politically smart to openly worry about it. For whatever reason, the thousands of jobs that the tech industry supplies in Ireland aren’t considered to be vulnerable. This might be because we can see no end to the tech boom.
It might also be cynicism over who benefits most from the tech giants’ presence here. On this latter point, there remains an undercurrent of resentment in some parts of the body politic about the effect that higher-paid tech workers have on rents and house prices in central parts of Dublin. Sometimes, this manifests as outright glee when projects don’t happen, such as when Apple’s data centre plans for Galway were pulled due to interminable delays in the planning process.
Even uglier sentiments are sometimes exposed, often about “foreigners” coming here who are “pricing the Irish out” of apartments.
It’s inconceivable that the tech sector here is poised for anything resembling a crash. But the outlook just got a bit gloomier.
