2023 tech layoffs: ‘We’re definitely not done yet,’ RecruitGyan Founder says

RecruitGyan Founder and CEO Neha Naik joins Yahoo Finance Live to discuss tech layoffs, what they mean for upcoming Big Tech earnings, investor sentiment, how AI is impacting the labor market, and the outlook for tech’s diversity gap.

Video Transcript

- And as layoffs continued to rise in the tech industry, stock prices for the sector's giants are following suit. And as we await earnings from the likes of Microsoft, Meta, and Amazon this week, could slashing employee headcount be the driver to a strong year for tech? We wrote about this in our "Morning Brief" today.

And for more, we welcome in Neha Naik, RecruitGyan founder and CEO. Thank you for being here. Where do you think we are in the layoff cycle? That would be my first thought here as we go into this week of earnings.

NEHA NAIK: Yeah, I mean, we're definitely not done yet. I definitely think there's more to come. And it's primarily because not just recession, right, but there was also overstaffing during the time of pandemic as tech companies were innovating as more people, like myself, were forced to stay home.

And there was all these innovative products and technologies. And, basically, that was a huge rise in employees at tech companies. And now, unfortunately, there's overstaffing. So tech companies are getting rid of all the people that they've overstocked in the last two years.

And, obviously, with the upcoming recession, tech companies have a couple of choices. The first is to increase their prices. The second is to sell more services. Or the third is to lay off employees so that they can still maintain their profit margins.

- And so when we think about how they're going to, and even past these layoffs, how they're going to really be prioritizing certain parts of their business, what have we learned from the layoffs about where they still are either prioritizing where profits are coming in from or even, on the other end, slashing some of the categories that were more big bets? And I'm thinking about even the metaverse headcount that had been added on at some of these tech companies. And now those ambitions, at least in the near term, have been put on ice largely.

NEHA NAIK: Definitely. I definitely think that profits are huge, right, especially if you are wanting to look attractive to investors, current or future investors, and also people that are equity holders in your tech business, right, whether you're, again, pre-IPO, post-IPO, whatever that situation looks like.

But also the other thing is here with the upcoming recession, there's definitely that mentality of taking less of a risk, right? People don't want to take as many risks. Founders and cofounders are hedging their bets, so to speak, like you said, just to make sure they're maintaining the risks that they're willing to take.

And, also, there's this culture of, OK, well, they're doing it. Should we do it, too? And I see that a lot with my clients, where I hear people in our industry within the tech realm are doing this. So we want to lay off companies, too.

So there's a lot of this culture of let's stay on trend. Let's do what other tech companies are doing so that we are saving face and gearing up for hopefully a profitable year in the next six months to nine months.

- So the question is, are you getting just an absolute deluge of new clients, people who have been laid off, who are looking for new work? And are they able to find? It is it relatively easy still?

NEHA NAIK: Yeah, that's a really good question. Yes, I'm getting a couple of different clients, actually. So I'm getting clients that are people that are laid off, unfortunately. And yes, we are able to place them still in a pretty decent time, which is anywhere from six to nine weeks.

Now, the reason behind that is while the bigger tech companies are laying off, the smaller tech companies or product companies, especially the B2B SaaS world, are still hiring for top talent, right, top tech talent. Now, they might not be hiring for hundreds and thousands of jobs, but they're definitely hiring for seven to ten positions every quarter. So we're still able to place-- find and place top talent for those companies, also working with companies that are scaling steadily, right? And they might not be scaling a lot, by a lot of numbers. But they're scaling enough to where they still need recruiters help to find the top talent because, again, the market is now saturated with a lot of talent.

And so having recruiters, like myself and my agency, to really figure out what the right person is for their specific company goes a long way. And then I have clients who are also hiring me to transition people off, so transitioning employees off postlayoff and how to secure their future as they look at other companies to join.

- Even amid layoffs and even on the other side of that, the kind of talent acquisition strategy that companies are going to be rolling out as they do, perhaps, restaff or retrain or skill in some other parts of the business, where do you think artificial intelligence plays a role in that? Is it on one side making the layoffs for the companies, is it making that a more clear decision for them or an expedited decision? Or is this something on the other side that they're also imploring to say, OK, if we've laid off in one category driven by an AI decision, where is AI telling us to add on in other parts of the business?

NEHA NAIK: Yes. And what I will say is tech companies are always innovating. They're always growing. They're always looking to do the next best thing, right? So integrating AI to maneuver those decisions for them is huge.

And so where I have seen AI really come in-- and I'll talk about talent acquisition in a little bit, but also just the reorg, right? So we have a client right now where they're using AI how to do a complete company reorg just based on where the need is for their products and services and how they can potentially pivot, and so using AI to guide those strategies. So they might be laying off people from one department, but they're growing another.

Or they're doing a complete restructure of one department, right? And they're telling people, if you-- this is not what you want to do because your job description said differently. But we are pivoting. Then you are welcome to walk away. And we'll happily provide severance.

From a talent acquisition standpoint, the way that companies are using AI to just reduce talent acquisition cost, right? So having I do any type of initial prescreening or reviewing or resumes or profiles so that they are not having to pay a sharp fee when a company finds someone. So they're still using the element of interviewing and prescreening internally, but then they're actually using AI to make the process a lot more streamlined and efficient.

- Finally, I want to ask you a question about diversity as well. With all these layoffs happening, I mean, there's been so much concern about diversity in technology for years and years. And we've seen the needle move a little bit. What do all these layoffs do to that? Is it hitting diverse folks disproportionately? Is it setting the industry back? What's your view?

NEHA NAIK: Really good question. In my opinion, I don't really think that it's setting the industry back because I do think that when layoffs are happening, they're happening based on where the profits need to go or what the reorg needs to happen, right? And so I think for the most part that I know of, tech companies are making it their goal to not let it affect the DE&I strategies that they have worked so hard to build, especially during the pandemic. That's when we saw a huge rise in the DE&I initiatives.

Now, on the other hand, there still remains to be interview bias and prescreen bias and just bias in terms of how people will perform based on their backgrounds and where they come from. And so I think that's something that we really have to proactively work on. This cannot be reactive. This has to be something that's proactive, where talent acquisition, hiring managers, tech founders really continue building this culture of diversity, equity, and inclusion, right, because even though employees are being laid off, the new company that does hire these employees, they have to really, really be cognizant that this could affect them if they don't go in head first and really focus on the structure of DE&I as they onboard the employees that were laid off.

- Are you finding that there is any lost momentum in that area? Or do you feel like it's still keeping up and even accelerating?

NEHA NAIK: I definitely think that, again, it really varies, right, on the company size, on the company initiative. So I do see that the bigger the companies, it does become more of a numbers game, right, because at that time, it becomes all about bandwidth. But I feel like with the smaller companies, it's a lot more thought through and a lot more about the culture within the startup. A lot of people join startups because of culture, because of the diversity piece, because of the inclusion and equity piece.

So I definitely think that for the bigger companies especially, you have to be really, really careful when you do lay off candidates or employees, sorry, and just really talk about why that was done and relate it back directly to the profit or your growth or reorg, right, and make that really clear. And provide them the right resources so that ones that they are laid off, they have all the right resources where they can find that next role that's perfect fit for them.

- Neha, thanks so much for your perspective. Really interesting stuff. Neha Naik is RecruitGyan founder and CEO.

NEHA NAIK: Thank you for having me.