How do startups benefit when Meta, Google, Apple… all freeze recruitment?

Late-stage startups are benefiting from a wave of layoffs and hiring freezes by tech giants. They can now easily add experienced engineers and senior management despite signs of a global recession.

Startups are offering attractive salaries and good incentives to attract talent that should belong to big tech names like Microsoft Corp or Meta Platforms Inc, Facebook’s parent company.

The number of employees of the programming platform has doubled to 540 this year, said Prashanth Chandrasekar, CEO of Stack Overflow. In which, some new employees used to work at Big Tech such as Alphabet or Apple.

Mr. Chandrasekar shared: ” As competitors reduce their size, their talented employees may consider looking for another place to work because the working environment at the company is not stable. ”

Similarly, X1 Card, a credit card start-up, said the number of employees has more than doubled in just one year. Deepak Rao, CEO of X1 Card, expects that in the next few months, the company’s number of employees will increase after large-scale layoffs of leading technology companies.

Start-ups have continued to deploy recruitment rounds despite the context of capital being depleted due to hyperinflation, the appreciation of the US dollar and consecutive interest rate hikes causing many technology giants to cut back. cost.

According to data from GlobalData, the venture capital that startups in the US raised in the first eight months of 2022 fell by nearly a third, to $146.3 billion.

Mr. Patrick McAdams, CEO of recruitment firm Andiamo, said: ” Tech startups that rely heavily on venture capital are also constantly cutting hiring. Other startups at the last stage of fundraising ramped up their recruiting activities .”

Mr. McAdams added: ” Start-ups are taking advantage of the dwindling tech recruitment market to find ways to hire key people. These hiring rounds are nearly impossible at this point in time. last year, when the pandemic spurred the demand for recruitment of personnel to increase ”.

A survey of 581 executives, mostly from US tech start-ups by recruitment firm A.Team and startup consultant MassChallenge, found that nearly 40% of them have stepped up their plans. recruitment plan in the first half of 2022.

Companies also shorten the time it takes to find talent and offer higher compensation to compete in the tight labor market.

However, some industry analysts have a different opinion about this hiring. They believe that the increase in recruitment of startups at this stage will not last too long due to the macroeconomic environment facing the risk of recession.

Dante DeAntonio, director of economic research at Moody’s Analytics, said: ” If the economy does indeed go into recession, it will only add to the pressure that tech companies face as demand dries up. exhausted “.

Source: Reuters