Last week Dell joined the roll call of large tech firms laying off staff globally.
It is yet another round of tech job losses that Ireland could be caught up in, with the PC maker employing around 5,000 people here.
Along with Google, Meta, Twitter, Intel, Stripe and several others, the job losses in the tech sector since late last year continue to mount into the many thousands, and Irish bases are not avoiding the haircuts. That means many tech professionals with years of experience are hitting the Irish tech-jobs market – but where exactly they will land is hazy.
Many may move to a similar role at another multinational – but that is not a given, says Gareth Fleming, managing director of Brightwater Recruitment.
‘As firms run out of cash there won’t be lay-offs. It’ll just be companies folding’
“People who worked in these big pillar companies probably will have more of an appetite now to talk to very good startup companies, because they’ve probably been burned slightly by the way that some of these big companies have handled the redundancies.
"I wouldn’t say they covered themselves in glory,” says Fleming.
Most infamously, Twitter laid off workers by setting a deadline for employees to respond to an email – with its new owner Elon Musk telling them to either pledge their commitment to his vision of the company, or else get out.
The presence in this country of big-tech multinationals has meant mixed fortunes for Ireland’s tech startups and scaling companies. While the large players helped develop a tech hub here, indigenous companies cannot compete with the allure of the large salaries and comprehensive benefits at Meta or Google.
Fleming says startups need to assess the lay of the land, and to be smarter about hiring in a tech downturn.
“If we look at the wider tech startup environment, to be honest, it’s a bit of an advantage right now, with all these lay-offs. That is, if they don’t get scared off from hiring.”
Big tech blossomed during the Covid-19 pandemic, as lockdowns accelerated the adoption of digital services – namely, e-commerce and tools to enable remote working. Following the vast hiring sprees of 2020 and 2021, that demand has tapered off.
“At one stage there was a hire-at-all-costs mentality at those companies. Prices were going up and up. Q1 last year is where we saw tech salaries reach the highest point in a decade,” says Fleming.
“They thought they’d be able to match that crazy growth when more normal times returned, but that hasn’t happened.”
The matter of salaries will remain a sticking point regardless of the economic surrounds.
Many big-tech workers, with skills in high demand, will be accustomed to large salaries – sums which many startups, SMEs and scaling companies cannot match.
“There is a realism coming into the salary expectations, which were getting extremely inflated. This is really a natural re-calibration that was going to happen because there was over-hiring,” says Ruth Lyndon, joint CEO at recruitment firm Phoenix.
“A lot of people are coming from very inflated salaries. Are SMEs going to be able to compete with that? Not necessarily,” she says.
Donal McGuinness is CEO of Prommt, a fintech startup which is in the middle of hiring – both at home and in the US, where it’s undergoing an expansion.
“There are some candidates that would have unrealistic salary expectations based on experience levels,” says McGuinness. “I think that’s not a problem for me to fix – I think that’s something the candidate is going to have to come to terms with, or potentially wait a long time.”
He said some tech workers may have become too acclimated to the salary conditions of the industry.
“Those salaries wouldn’t exist elsewhere, and you can’t compare A with B.”
Bobby Healy, chief executive of drone delivery start-up Manna, said startups may not find laid-off workers lining up to join their businesses.
Often it comes down to a worker’s appetite for risk, especially among those with a mortgage, or with dependents.
“Culturally, I think a big-tech employee isn’t usually a good fit for a startup,” says Healy. “People find the safe harbour of a tech giant appealing – maybe they have a mortgage, or want to get a mortgage.
“The risk averse will always look for safe harbour, so long as the tech companies provide compelling work – which a lot of them do – and they provide great careers, education and are very good homes for people. They’re just people with a different appetite for ambition and risk.”
Healy says startups should appeal more to younger candidates and graduates who would have otherwise sought work in the likes of Google or Amazon.
“After they make these headcount reductions, the fallout is going to ultimately be a lack of belief in much of the kool-aid they’ve been selling,” says Healy.
“My advice to anyone starting off, is to start off in a small company.”
Lyndon says startups that are still hiring need to focus on soft skills – such as flexibility around the availability of remote working – to compensate for the salary conundrum.
While remote or hybrid working has been normalised since 2020, in recent months a number of large multinationals have begun paring back that policy.
Most notably, Musk’s Twitter told employees that they must come into the office, with only some exceptions.
Elsewhere EY chief executive Carmine Di Sibio says he expects people to come into the office more often in future, while Disney boss Bob Iger told employees they must be on-site at least four days a week.
Startups and SMEs should try to appeal to laid-off tech workers who feel cast aside by their old employers, by offering very flexible remote working policies, says Lyndon.
“There are some people coming out of the larger tech environment that felt like a number on a piece of paper,” she explains.
“For sure, you have to be flexible, you have to offer a level of hybrid working. There may be some employees that you will not hire, they won’t want to come to you.”
Brightwater’s Gareth Fleming adds that some companies are pushing back on remote working – and this will become a bone of contention with bosses.
“Right now, what we’re seeing in the recruitment world is companies are beginning to ask people to come back. I think that’s going to be an issue that rears its head this year.”
He expects that this will lead to “a bit of movement and attrition” in those companies.
“Working from home is a big thing to give up,” he says.
Beyond office flexibility, startups can also offer early-stage employees a piece of the pie – through share options.
By giving employees an ownership stake in the company, they could potentially reap greater rewards if the company makes it big.
However, share options – and specifically the Key Employee Engagement Programme tax scheme – have drawn the ire of company founders.
Startup lobbying groups such as Scale Ireland say its processes are still laden in red tape, and not as attractive as similar schemes in other European countries.
Much of the so-called ‘tech wreck’ has focused on the large numbers being let go by the giant companies – but the tech startup sector is not immune from the downturn either.
Later-stage Irish tech companies like Wayflyer and Flipdish, which both raised sizeable amounts of investor cash during the pandemic, have laid off workers recently.
Many companies that are at the early- to mid-stages are not focused on revenue in the same way big tech companies are.
Healy says the crunch for these companies will come later down the line, when they go out to raise money from investors who are more sheepish about deploying capital.
“The real effect on Irish startups isn’t necessarily the fallout from big-tech guys – it’s about the confidence in risk around the world for investors – and that ultimately will be more latent than these lay-offs,” says Healy.
“The lay-offs at tech giants are very quick, it’s a speedy correction.
"The correction in our space will happen slower and slightly later – as companies start to run out of cash and runway – and they won’t be lay-offs. They’ll be just companies folding.
"The damage will come. It will be significant, and it will be later.”