NEWS & UPDATES
SILICON VALLEY BANK COLLAPSE: HOW DOES IT AFFECT TECH JOBS?
MARCH 30, 2023
Now that one of the biggest banks that support tech startups has fallen, how will the job-hunting landscape be for the tech industry?
According to the news reports, Silicon Valley Bank (SVB), the 16th largest bank in the U.S., was recently shut down by regulators in the midst of liquidity concerns and bank runs. SVB’s collapse is now hailed as the largest bank failure since the 2008 global financial crisis, forcing a government takeover and calling into doubt the fate of almost $175 billion in customer deposits.
Having been a major lender to tech startups and venture capital firms, SVB has left many business owners and investors worried about their fund retrieval. The bank’s downfall has also made several tech employees wonder about the future and stability of the tech startup ecosystem. Many fear that the ripple effects of this huge bank crisis will be magnified in the upcoming years.
Implications for the Future of the Tech Industry
A credit crunch in the tech industry has become one of the most immediate effects of SVB's collapse. Many startups struggle more than ever to secure the funding they need for growth and success, which could slow down industry innovation and reduce the number of new tech businesses being created.
Since many startups now have difficulties staying afloat without SBV’s funding support, another major concern could be the possible tidal wave of bankruptcies and consolidations. When this happens, the overall economic growth would drop, resulting in fewer job opportunities for tech professionals.
Massive Tech Layoffs
NBC News reports that months before Silicon Valley Bank’s historical failure, the bank secretly laid off 100 to 120 employees. The recent job cuts done in January 2023 represented only about 1.4% of SVB's total of 8,500 employees. The tech professionals who lost their jobs came from non-customer-facing departments, specifically recruiting and talent acquisition.
Between late 2022 and early 2023, Silicon Valley Bank noticed that deposits were starting to drop. This decline was caused by the adjustments that the bank's clientele of tech companies, private equity firms, and venture capital funds made to the interest rate environment. Therefore, the sudden fallout of Silicon Valley Bank was also a result of the challenges that the entire tech startup industry has been facing in the previous years. The increase in interest rates has hindered many tech startups to drive up valuations and support money-losing projects. According to data released in January by CBInsights, venture funding in the United States has declined by 37% in 2022 compared to 2021.
In fact, the collapse of Silicon Valley Bank may have been worsened by tech startups that needed to withdraw funds. Due to fears of a broader macroeconomic downturn, some advertisers and consumers have started cutting into the tech industry's revenue drivers. This approach has pushed several tech companies to implement cost-cutting strategies which include mass layoffs and a renewed focus on efficiency and innovation. In the first two and a half months of 2023, the tech sector laid off nearly 130,00 workers. Even employees who work at notable firms, like Meta, Microsoft, Amazon, and Google have been hit by uncertainties in their roles because of the continuous challenges that the current economy is facing.
Acceleration in Tech Talent Shift
Due to the job-slashing wave in the tech world, most job opportunities are now in other industries with an increased demand for digital and tech workers. These sectors include health care, banking, retail, and manufacturing.
According to New York Times, indications of economic recession and labor demand decline across tech roles are already present. CompTIA analysis of data from LightcastJob revealed that job postings for tech occupations slipped under 300,000 at the beginning of 2023.
However, according to market analysts, this economic downturn won’t last long. Even though there have been uncertainties, growth in tech occupations has nearly doubled since 2000. Based on the data from the Bureau of Labor Statistics, 3.33 million Americans were employed in tech occupations over two decades ago.
In November 2022, the unemployment rate for tech professionals was 2% compared with the national average of 3.7%. The tech job opportunities among retail companies like Walmart have helped in reducing the unemployment rate among tech workers. In recent years, the retail giant has been hiring more than 20,000 engineers, data scientists, and tech product managers as part of the company’s efforts to establish its e-commerce and delivery service.
In March 2023, Walmart announced its need for additional 5,000 tech workers worldwide. Even though experts say that Walmart is not the first company a tech professional would think of applying to, the retail giant has been able to fill a huge part of their job openings by luring tech professionals away from Silicon Valley stalwarts and startups.
It’s clear that despite the massive layoffs in the tech world, there has been a growing demand for tech talents in non-tech industries. At Recruitday, we have the right tools and network to make your job search easier even outside the tech industry. Find great career opportunities by contacting us. We look forward to being your tech career sidekick.
About the Author:
Agatha Buensalida has been working as a digital content writer since 2017. She has written various copies, blogs, and social media posts for a wide range of industries locally and internationally. She is currently pursuing a Master of Fine Arts degree in Creative Writing at De La Salle University - Manila.
MARCH 30, 2023