Big Tech Freeze

Offshore Development
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4 min

Big Tech Freeze

Dark economic clouds are forming on the horizon. The global economy is teetering on the brink of recession, and as the downturn deepens, the markets get spooked. There's nothing that international financial markets fear most than uncertainty. This instability is manifesting itself in many ways, including a so-called Big Tech Freeze. Big players are slamming the brakes on hiring, and many are restructuring their businesses to better weather the incoming storm heralded by those dark clouds.

This poses a couple of valid questions, however. Is a hiring freeze the right strategy at this time? And how will it affect the global talent shortage? 

This article aims to answer both of those questions.

Background

The world has been in a state of turmoil for the best part of three years. Covid-19 decimated the economy, and just as the pandemic subsided, Russia launched a military offensive in Ukraine.

The global economy is more interconnected than we think, so these events combined have undermined the world's economic foundations in many ways. Energy costs are rising. Supply chains are compromised. The cost of living is increasing. Inflation is at its highest in decades. Central Banks are hiking their interest rates to curb inflation, and at least further increases are likely during the early part of 2023. Rises in interest rates negatively impact households and businesses, though, as mortgages, loans, and other financial products become harder to service. This, in turn, means less spending. The dying months of 2022 are seeing a marked slowdown in economic activity.

Most economic indicators have turned red. Things are not looking particularly favorable for the coming year, and a recession is looming.

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Companies engaging in hiring freezes

Some of the most prominent market players, including Google, Microsoft, Meta (formerly Facebook), and Apple, have imposed hiring freezes for the foreseeable future.

Google sent out a company-wide memo in July explaining that hiring would be severely scaled down for the remainder of the year. Google followed suit just a week later.

Yet, these are hardly the only companies slamming the brakes on their hiring policies. Twitter had already done so earlier in the year. In fact, the company laid off almost 30% of its talent acquisition team in August. 

Meta took a particularly callous approach to this process. During a Town Hall-style call with staff, CEO Mark Zuckerberg said that 'realistically, there are probably a bunch of people at the company who shouldn't be here.' Soon after, a financial report revealed a stark decline in revenue for Q2 2022. Meta vacated its offices on Park Avenue in Manhattan in early October, though the company still operates out of other locations in New York.

Apple went a different route. The company communicated that product development investment would continue, but many departments' headcounts would remain the same throughout 2023.

All this paints a somewhat uncertain economic landscape. In the context of ongoing geopolitical instability, the overall financial situation does not offer many reasons for optimism over the coming months.

Talent shortages

The shortage of IT talent worldwide is acute across multiple disciplines within the industry. It is not a recent problem, either. The demand for skilled IT personnel has outstripped supply for many years now. The Covid-19 pandemic only exacerbated it, but it has been an ongoing issue for a long time. A hiring freeze on top of everything else that's going on is only likely to make things even worse.

Yet, software engineering is one specific aspect of the IT industry that hasn't been majorly affected by hiring freezes. Amidst the ongoing digitalization of industry and society, the metaverse, etc., software engineers remain in massive demand. Again, while the demand far outstrips supply, companies are still hiring software engineers, even if hiring for other departments is frozen or scaled down.

Offshore development centers

As the name suggests, an offshore development center (ODC) is a facility abroad built to house one or more development teams that will work on projects on a client's behalf. Usually, ODCs are located in or near significant technology hubs to take advantage of existing infrastructure, ease of access, transport, amenities, etc. These hubs provide software development services that are an essential part of a company's evolution and competitiveness and remain largely unaffected by hiring freezes.

So is a hiring freeze the right strategy in the face of a looming recession?

When economic woes begin affecting a company's bottom line, the knee-jerk reaction tends to involve either layoffs or a hiring freeze. Against uncertain conditions, a hiring freeze can have some justification, as forecasting becomes unpredictable. Layoffs are rarely the correct answer, as they lead to talent shedding and ultimately hurt the economy even more.

Nevertheless, hiring freezes should be planned and implemented very carefully. It is a balancing act for the company, which must remain financially viable and competitive in the market. Because of this, software engineering remains unaffected mainly by worldwide freezes. The work that developers do in those ODCs supports a company's backbone.

Hiring software engineers with AllSTARSIT

Finding the right talent for the right job can take time and effort. It takes a dedicated and passionate team to do it; a team and a business with strong brand recognition and knowledge of the local legal framework. All these things come together in AllSTARSIT. We have mastered the recruitment process so you can spend your time on something other than it. Plus, we offer an industry-leading range of benefits & perks. All our clients have to do is present an exciting project, and we care for the rest. 

See our Expertise page to learn more about the hiring process industries we work with, and read some client reviews. 

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