Tech Industry Expert Indicates an Acceleration in Digital Transformation Outside of Big Tech
Despite widespread concerns surrounding the global death of tech skills across various sectors, this year has brought a wave of layoffs throughout the industry, totalling 194,659 workers – according to Layoffs.fyi. A driving force to these layoffs consists of low valuations and several macroeconomic challenges, combined with a massive acceleration in AI technology. Claire Trachet, CEO/founder of business advisory Trachet, highlights the disparities between skills shortage in tech amidst layoffs and the challenges smaller businesses will face by implementing AI.
There remains a shortage of technology workers and experts everywhere, in the UK there were around 870,000 tech and digital job vacancies available between January to May 2022 according to Tech nation. Last month alone, U.S. employers across all sectors posted more than 300,000 job ads for open tech positions, a six-month high, according to IT trade group CompTIA.
Furthermore, the State of European Tech22 poll, gathered by Atomico, found that as much as a quarter of businesses predicted that retaining talent would be an issue, up 66% from 2022. This presents an issue for big tech companies, which now face losing their top talent to rival companies as they lay off tens of thousands of workers in favour of implementing AI solutions to keep costs down.
A clear example of this is British telecoms giant, BT, who are the latest to announce they will be cutting 55,000 jobs, with one-fifth of those positions being replaced by AI. BT’s decision is a clear indicator layoff fever – although potentially necessary – which embodies the new business model which sees companies replacing staff with AI. Claire Trachet gives a word of caution for SMEs and startups looking to replicate this, as the capabilities required to do so are extensive and will potentially deal a blow to company culture – as well as the future of the tech industry.
Claire Trachet, CEO/Founder of business advisory, Trachet, comments on the implications of implementing AI and the challenges of smaller businesses replicating the AI business model:
“Although AI has brought about a wave of excitement, with its popularity soaring amongst many companies and investors, the trend of layoff fever in favour of AI is now spreading out across various industries. It’s extremely important for smaller companies who are looking to replicate this, to take a step back, pause, and reflect on their business model. There needs to be an understanding as to whether AI is particularly needed within your company and whether it will serve to benefit your consumers.
“There also needs to be caution taken amongst the safeguarding concerns surrounding AI. Small businesses must question whether they have the correct in-house team to not only implement this kind of technology, but also manage the risks that come along with it. Instead, smaller businesses should look at other ways to managing cash flow and growth, for instance, looking to their CFO, whose experience should anticipate the hurdles the business may face and help create optionality – preserving critical jobs.
“Cutting down staff should always be the very last resort. Instead, companies should be mindful of their budgeting and think about reallocating all of their resources where they can, based on what they have versus what they can deliver, in terms of tools, people and organisation. And through this, after three months, they will slowly see the benefits, and by six months, the company can be on a completely different playing field.
“Mass layoffs obviously risk damaging company culture to the point of no return and they can make it incredibly difficult to attract great talent that will help the business thrive. Across the tech sector employees now often fear for their financial futures because layoffs have become so normalised. This will make it difficult for bigger tech companies to continue to retain staff, which will ultimately lead these workers to smaller tech startups.
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