Tech industry woes: Retrenched employees unfazed by spate of layoffs, but experts say outlook for sector remains uncertain

SINGAPORE — The outlook for the technology sector is uncertain and will continue in the coming months, according to experts, but undergraduates interested in the field and former employees who were retrenched recently say they are still keen on pursuing a career in the industry.

Among the reasons cited were the wide range of opportunities available and the long-term relevance of the industry. 

Last Friday (Nov 4), Twitter laid off about half of its employees across the globe, including in its Singapore headquarters. This came after Elon Musk acquired the company for US$44 billion (S$62 billion).

Then on Wednesday, Meta chief executive Mark Zuckerberg announced that the company would cut 13 per cent of its workforce, or more than 11,000 employees.

These follow a spate of retrenchments at big names such as Stripe, Shopee and Grab, some of which have offices and employees in Singapore.

These layoffs were fuelled by a multitude of factors, such as rising interest rates and investors’ reduced appetite for risk, experts told TODAY. 

TEMPORARY VOLATILITY, DIVERSE OPPORTUNITIES

Although the job cuts have cast a pall over the industry, some undergraduates and recently axed employees told TODAY that they still want to pursue a career in the field.

A former Twitter employee in his 20s who spoke on condition of anonymity lost his job in the sales department last Friday.

Yet he still sees bright spots in the industry which he said offers diverse roles and exposes one to opportunities in various fields such as fintech and medtech.

He added that the skill sets gained within his four years of experience in the field are also “super transferable”, keeping him relevant in the industry.

An ex-employee from another tech company, which recently also terminated employees in Singapore, insists that the sector remains relevant in the long term, despite its volatility.

“Tech will continue to simplify the way businesses run and engage with their customers. Going ahead, technology will be foundational to any business,” said the man who is in his 40s and declined to give his name. He has been in the industry for 17 years.

“Given my affinity towards technology and the value it’s going to deliver in the long term, I would continue to be in the B2B (business-to-business) technology domain.”

One fresh graduate from the National University of Singapore (NUS), Ms Nur Wahidah Zainal Abidin, said she is interested in the fintech sector and would still pursue it despite the news about the mass layoffs in tech companies. 

The 24-year-old added that more consumers are using fintech particularly when shopping online.

"I know there are layoffs at Shopee, Twitter and all; I think it's inevitable. But technology will always be useful and relevant," she said.

Another undergraduate who declined to be named said she would still pursue a role in the tech sector after graduation.

She believes that the uncertainty surrounding the industry is only temporary, due to the global economy, and was not surprised when the mass layoffs were announced.

She said: “I have mentally prepared myself for the fact that the private sector is extremely unpredictable. 

“But I still think that tech pays really well, offers work-life balance and has a lot of career opportunities for progression as compared to anything else, so I would still like to pursue a career in tech.”

INVESTORS UNWILLING TO TAKE HIGH RISK

Experts attributed the layoffs in the tech sector to a culmination of factors that have pushed companies’ focus away from growth and towards profitability.

Assistant Professor Ng Weiyi from the NUS Business School pointed out that most of these companies rely largely on investors for funding.

“The goal is to grow at all costs… When times are good, companies that had backing from venture capitalists try to maximise their market share and the quickest way to do that is to recruit top talent,” he said. 

With geopolitical uncertainties like the ongoing war in Ukraine, rising interest rates and inflation, investors are opting for less risky and attractive investments.

Hence, tech companies that had once relied heavily on investors to grow now need to be more financially prudent, said Asst Prof Ng. 

“But the biggest cost is people, so as times are now bad, companies will let go of some staff. It’s cyclical… Companies will have layoffs and hiring booms,” he said.

Some tech companies are also feeling the pinch as inflation forces consumers to reduce spending. 

Companies that provided services catered towards Covid-19 needs — such as video conferencing applications and e-commerce — have also not seen as much growth as countries slowly reopen, impacting their profits, added Asst Prof Ng.

For social media companies, advertisers are also spending less, said Mr Prem Bhatia, chief executive officer of Graas, a company that uses artificial intelligence for e-commerce business growth.

One reason for this is Apple’s introduction of app tracking transparency, which has hampered advertisers' ability to target users based on data. 

As they spend less on digital advertising, this has impacted social media platforms reliant on advertising spending like Facebook and Snapchat.

“From a regional perspective, Southeast Asia is a little more insulated because most Southeast Asian countries are primarily Android-heavy markets. Should Android (run by Google) follow Apple’s app tracking transparency, then we will see similar issues in Southeast Asia,” said Mr Bhatia.

Layoffs were bound to happen in the tech sector, though nobody could predict to what extent, said Ms Yorlin Ng, chief operating officer of venture outfit Momentum Works.

“In the short term, tech companies will be more cautious with manpower. However, they also do not want to overdo cutting their headcounts,” she said.

“Once the uncertain period is over and growth returns, they will need to start ramping up hiring again — and how they have managed the layoffs will affect how prospective employees view them.”

Although it is hard to predict how long the trend of layoffs in the tech space might last, she said some factors that could help things subside could be a combination of the United States ending its rate hike cycle, China relaxing its zero Covid-19 policy and global inflation easing.

COMPANIES ENTERING TECH SPACE CAN BENEFIT FROM BIGGER HIRING POOL

However, not all is bleak for those laid off, said analysts, as there are companies actively looking to hire people.

“A lot of people, especially the young professionals working in tech, have not yet experienced cycles and very difficult periods. But this, like any other difficult period in the past, shall pass,” said Ms Ng.

“And it's not all bad news. Layoffs from big techs are also good news for startups trying to innovate but struggling to compete with big tech firms for good talent.”

Some startup founders have found it easier to hire talent recently, she added.

Traditional companies trying to enter the tech sector, such as banking and healthcare companies, now have a larger pool of talent to tap, said Asst Prof Ng.

“Tech companies have been able to offer large compensation packages with their ‘endless’ amounts of money to top talent in the past, which some companies cannot match up,” he noted.

On Friday, National Trades Union Congress secretary-general Ng Chee Meng told The Straits Times: “In the local space, there is a lot of aggregate demand for tech talent."

With about 400 job openings at the Infocomm Job and Skills Fair, which runs till Nov 25 online, Mr Ng urged those who have lost their jobs to consider applying.

"With this job fair, we are trying to help match those already equipped with the skills to jobs that are available,” he added.

To find out more about the job fair, visit https://uspur.e2i.com.sg/1122