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Recent mass layoffs in the tech industry, like when Amazon and Meta fired tens of thousands of workers, have given companies that wanted to grow but couldn’t because they didn’t have enough talent a great chance to do so. Traditional businesses that had trouble modernizing their business processes can now hire some of the best people in the world. Traditional companies that could never compete with recruiters from hip Silicon Valley companies can now offer laid-off tech workers a way back into the workforce.
We think that the current layoffs have given traditional companies a great chance to do well. By recruiting and hiring from the former ranks of the world’s leading digital companies, they can get access to new talent in a less competitive market. This talent can help them turn their business models that aren’t changing into ones that can change quickly in the digital world. This will help them get ready for business environments that are becoming more chaotic. In this article, we explain why these people lost their jobs. Then, we talk about what companies that don’t work in technology can do to take advantage of the sudden influx of talent.
We are seeing a mass reversal of how many more people were hired than needed during the pandemic. Mark Zuckerberg, the CEO of Meta, sent a message to employees about the recent layoffs. He said, “When COVID first started, the world moved online quickly, and the rise of e-commerce led to huge revenue growth. Many people thought this would be a permanent speedup that would keep going even after the pandemic. Unfortunately, it didn’t work out the way I thought it would.
Patrick Collison, the CEO of Stripe, wrote a similar statement to explain a 14% cut in staff: “When the pandemic hit in 2020, the world turned overnight to e-commerce. We saw much higher growth rates in 2020 and 2021 than we had before… The world is changing again.”
The tech industry wasn’t ready for interest rates to go up so quickly, which drove down the prices of companies whose profits wouldn’t come for a long time. This is because the discount rates that are used to figure out valuations go up as interest rates do. In the past year, the tech-heavy NASDAQ has dropped by about 30%. Cathie Wood’s Ark Innovation Fund and other more risky, tech-heavy funds have lost 65%. There have been a lot of fintech funds and crypto funds that have failed. There are no more new businesses being started, and there are no more IPOs. This hurts the growth plans of tech companies that need more money and is now cutting back on hiring because they want to grow.
But these problems shouldn’t have as much of an effect on traditional companies with strong foundations as they do on young tech start-ups. In other recessions, employers cut jobs that were no longer essential to running the business. However, the recently laid-off workers have a wide range of skills that are in high demand. Amazon fired people from its Alexa division, which works with technologies like voice technology, artificial intelligence, and automation, among others. Twitter fired people from its engineering, data science, machine learning, and ethical AI teams.
The pandemic also brought about a change in how businesses work. Organizations realized they needed to make their business processes more flexible by changing them. For example, if you want to do remote work, you need to do more than just hold Zoom meetings from home. Managers can now run a bank’s entire platform for trading currencies from home as well as from the corporate office.
This permanent and deeper shift toward hybrid work requires new human resources systems, a reorganization of workflows, new and updated e-commerce platforms, improvements in engineering, better cyber security, and more. Companies that were too slow to build these systems during the pandemic can now use the influx of talent to show them how it can be done.
A year ago, a young, aspiring software engineer might have been more likely to join a cryptocurrency exchange than the online business of a store. Now that tech companies are laying off workers, a brick-and-mortar store or any company with solid fundamentals that haven’t fully modernized can hire better people than tech companies.
Traditional companies should hire people who can help them do the following: move to a remote workforce; analyze and optimize the customer journey; automate customer service; collect and use AI-driven insights to improve sales efficiency; automate employee performance management; improve supply chain management; optimize human resource planning.
Target, Nike, Home Depot, Hasbro, and Best Buy all did well with digital transformations, while GE, Ford, and Procter & Gamble all failed. In each case, it was the employees who decided whether or not the efforts to change were successful.
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