In the past month, almost 50,000 jobs across North America have disappeared in the technology sector, as both large and small companies axe workers to trim their costs.
At a time when our province is hoping to expand the tech sector into the future, sector-wide layoffs are unwelcome news.
Analysts say while the sheer number of job losses is daunting, most tech companies are still vastly larger than they were three years ago.
“It’s disappointing to see bets that were previously made not fully paying off, and unfortunately, human capital pays the cost. The good news here is that Canada’s tech industry as a whole, is incredibly robust,” said Carmi Levy, a London-based tech analyst.
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“What we’re seeing now really is not a reckoning in the tech industry as much as it is a readjustment, or right-sizing to accommodate sort of that post-pandemic reality. It is not tech folding up its tents and going home. It’s tech simply adjusting itself for the realities of this new economic landscape as the economy tightens a little bit.”
TECH WORKERS SHIFT GEARS
Levy says tech workers generally have an easier time finding new work than those cut in manufacturing or service industries.
“Tech workers do shift gears very well, and there are options, there are alternatives in the market. As we’ve seen with previous generations of layoffs in tech, those affected workers tend to find their next gig fairly quickly, much more quickly than the broader economic average.”
The sector-wide cuts are having an effect in Alberta. When Alphabet – Google’s parent company – axed 12,000 jobs, it announced the closure of the Edmonton office of the AI research hub DeepMind.
Last week, Calgary-based Benevity announced it was cutting 14 per cent of its workforce. The company cited market condition in making the announcement, which came just over two years after the company achieved “unicorn status” after striking a $1.1-billion US deal with Hg Capital LLP, based in Britain.
Despite that, the Business Council of Alberta remains bullish on the tech sector.
“Alberta is a tech hub, and that the tech industry in Alberta, despite some of the news that we’re hearing here and around the world, is still strong, and it’s still growing,” said Scott Crockatt, VP of Communications for the Business Council of Alberta.
“Alberta is not going to be immune to these global forces that are taking place. We are going to be impacted by them. But Alberta is going to likely fare much better than many of these other tech hubs around the world.”
That didn’t stop the tech layoffs from becoming a political issue. NDP Leader Rachel Notley claims tax credits eliminated by the UCP government, and changes to post-secondary funding in the province are scaring away tech investment.
“Without investment, we are at significant risk of losing our competitive advantage, which is exactly what has happened under this UCP government as evidenced by DeepMind deciding to close its office in Edmonton but not in Montreal or Toronto to offices which actually opened after Edmonton,” said Notley in a campaign-like speech in Edmonton
“Danielle Smith and the UCP simply don’t care about tech jobs, and the jobs that tech creates in every sector of our economy.”
The provincial government says Notley is off-base saying Alberta’s tech sector is robust even in the face of the current market correction.
In a written statement, Minister of Technology and Innovation Nate Glubish told CTV:
“Alberta’s tech sector is on fire at a time when tech investment across Canada is on the decline. In 2021 we attracted a record-breaking $561 million in tech venture capital and are on track to smash that record in 2022.”
TREPIDATION ON CAMPUS
Despite that optimism, there is some trepidation on university campuses among students working toward a career in technology.
“I think there will still be some jobs but definitely as of now is looking like it could be harder to find work,” said Caleb Irvine, a software engineering student at the University of Calgary, “and all those people who just got laid off also are looking for the same jobs that people who just graduated are going to be looking for.”
Levy says tech tends to do well through tough economic periods, and expects the sector to continue outperforming most of the economy moving forward.
“When we’ve seen some of the biggest innovations in technology over the generations, they tend to come during and following recessionary periods, and that is exactly what will happen now.”