How Will The Talent Market Change Over The Next 6 Months?
5 key predictions as well as top tips from insiders to adapt to the sharp economic and hiring shift.
A lot has changed since the talent war and poaching spree that kicked off the year. As we enter the bear market with rising interest rates and inflation, much of the post-pandemic optimism has dimmed.
Tech companies previously propelled by COVID-boosted expansion have also hit the brakes on hiring. Between October 2021 and May 2022, hiring in both Shopee Singapore and Grab shrunk by 20 per cent.
How will the hiring culture shift? Read our top five predictions, as well as tips from industry insiders, Eric Koh, COO of Dedoco; Qin En Looi, Principal at Saison Capital; and Siddharth Shanker, CEO of Pelago to prepare for a long, slow recovery.
#1 EXPECT MORE HIRING FREEZES AND LAYOFFS TO COME
“Every upheaval comes with opportunities. This is a great window for start-ups with hiring needs to snap up the best talent and move forward with the strongest team.”
Hiring freezes are sweeping through the tech industry, including at Twitter and Intel. Some have also begun laying off employees. Coinbase laid off 18 per cent of its staff, Shopee has laid off employees in Southeast Asia, Mexico, Argentina and Chile, and Indonesian startup Zenius also reduced its workforce substantially by 25 per cent.
More layoffs may be done discreetly to manage employee or external stakeholder sentiments. Across the industry, many employees are picking up on these signals and turning their “open to work” indicator on Linkedin on.
Tip: Every upheaval comes with opportunities. This is a great window for start-ups with hiring needs to snap up the best talent and move forward with the strongest team. Besides picking from a fresh batch of layoffs, early-growth stage startups may also pick from highly sought-after founders whose early-stage startups have failed to secure fundings.
#2 EXPANDING COMPANIES WILL HIRE WITH CAUTION
“We are growing right now and need to hire to build our product. But we are practising more caution and don’t plan on over-hiring.”
Even companies that are currently expanding such as travel tech company Pelago plan to hire more conservatively in the months to come. “We are growing right now and need to hire to build our product. But we are practising more caution and don’t plan on over-hiring,” shares CEO Siddharth Shanker.
Tip: Businesses not under financial pressures will have to balance growth priorities with the need for efficiency in current economic conditions. “It is hard to say how long this will last, but we definitely won't see as quick a recovery as we did in 2020 from COVID-19 crash. Both companies and talent need to be prepared for a long-drawn out bear market,” says Qin En Looi, Principal at Saison Capital, venture capital arm of Japanese credit company Credit Saison.
#3 SALARY INFLATION IS LIKELY TO SLOW DOWN
“We hope new talents join us for the right reasons not hinged solely on a price war because that is not sustainable and distracts from the actual motivations to join a company and build a successful career out of it.”
“The wage inflation was partly the result of companies raising a lot of money and being willing to throw a lot of money. It was not sustainable,” notes Shanker. “I think those same companies will begin doing hiring freezes or laying off people and optimising towards efficiency and profitability so at some point, that should start reducing wage inflation,” he adds.
This is good news for those looking to hire, as they will have better access quality to a larger and better talent pool at more reasonable compensation. “We hope new talents join us for the right reasons not hinged solely on a price war because that is not sustainable and distracts from the actual motivations to join a company and build a successful career out of it,” adds Eric Koh, COO of decentralised platform Dedoco.
Tip: Even amidst the backdrop of hiring freezes and layoffs, companies should continue to offer top talent reasonable compensation to ensure that they are committed to grow with the company. “Our stance and policy towards talent acquisition remains constant as the candidates are benchmarked against both our internal staff pool and with the industry. Taking care of our team members and their careers is a core value at Dedoco,” stresses Koh.
#4 SOME ROLES WILL STILL REMAIN IN SHORTAGE
Roles such as engineering, product management and tech sales remain in demand. “The biggest crunch we face is in engineering. [In the current market], people are also more afraid to move, so unless somebody loses a job and is out there, there will still be a shortage of talent in certain roles,” says Shanker.
Tip: Koh shares that Dedoco collaborates with other tech companies who may be laying off their staff to fill up some of their own roles.
#5 EMPLOYEES WILL BE MORE PRUDENT ABOUT THE STARTUPS THEY JOIN
“More are starting to question the ‘sky is the limit’ argument for future valuations given the current state of the market.”
“2022 will differ from 2021 not just in how the markets are performing; employees are also starting to become more discerning,” says Qin En Looi. “More are starting to question the ‘sky is the limit’ argument for future valuations given the current state of the market, and employees are being wary of the up-side potential of the startups they are working for. In short, more questions are being asked to balance the optimism of 2021 with the pragmatism of 2022,” he observes.
Tip: Even in the current bear market, early-stage startups still have huge potential for growth and capital gains for employees who hedge the bets right. “Leverage ESOPs effectively. ESOPs for earlier stage startups will continue to remain attractive because of the massive up-side potential. Employees who join a startup at Series B or earlier can often expect multiples in their ESOP value, and even with the current declining valuations, it still remains as a highly attractive option that potentially exceeds their cash compensation,” says Looi.