Technology
What is end-to-end encryption and why are tech companies focusing on it?
At the end of 2019, Big Tech firms were hungry for talent. Google, in its annual report, said it increased the number of employees by nearly 23% to 1,18,899. The search giant noted it would onboard more engineers and product managers to run its services. The company was also keen on bulking up its sales team to grow cloud business. Other top tech firms too sought to increase their employee numbers. But COVID-19 upended the global economy, making several businesses re-draw their strategies and change course. Many companies had to let their employees go. About 20 million workers lost their jobs in the U.S. alone. Half of those cuts occurred in the last two weeks of March 2020, the period when several countries enforced lockdowns to protect their citizens from getting infected by COVID-19.
The pandemic’s effect on jobs was far-reaching. In the Asia-Pacific region, millions of people were asked to work reduced hours or for no hours at all. Overall, working hours in the region decreased by an estimated 15.2% in the second quarter and by 10.7% in the third quarter of 2020, relative to pre-crisis levels, according to a 2020 report by the International Labour Organization (ILO).
The ILO report titled ‘Asia-Pacific Employment and Social Outlook 2020: Navigating the crisis towards a human-centred future of work’, estimates the pandemic to have wiped out some 81 million jobs in 2020 compared to pre-crisis trends. It noted that an additional 22-25 million employed persons were pushed into extreme poverty, making them live on less than $1.90 per person per day. A large proportion of these jobs were low-wage earning employments; service-providing sectors like leisure, travel and hospitality were worst hit. For instance, about 16.1 million of the nearly 20 million jobs lost by workers in the U.S. in March 2020 were in the hospitality sector.
But jobs that let people work from home had a longer runway. According to estimates by ILO, prior to the pandemic, only 8% workers worldwide worked from home on a permanent basis. That size has grown exponentially since then. The multi-lateral organisation’s labour force survey suggested that in the second quarter of 2020, approximately 17% of the world’s employed population were working from home. That is about 560 million workers.
Separately, Internet-savvy consumers who chat, share videos and shop online using e-commerce platforms and social media apps extended their usage time. So, the few billion consumers and half-billion workers became an important market for large tech firms to sell their products and services. And to grease the wheels of digital commerce, they went scouting for people who can code, sell and put digital stuff on the cloud.
Google stuck to its pre-pandemic year hiring pace, and increased its total headcount to 1,74,014 as of June 30. The search giant is not alone. Microsoft, which shares its annual report in the middle of every year, nearly doubled its headcount to 2,21,000 between July 2018 and June 2022. While Facebook’s total headcount jumped 60% between end of 2019 and 2021, the social media firm’s total employee count was less than half of Microsoft or Google’s. Amazon, the giant in the Big Tech pack, said it employs about 1.6 million full-time and part-time employees as of December 31, 2021.
Hiring tech talent was not easy. In 2021, tech job postings in the U.S. nearly doubled while the average number of applicants shrunk by 25%. There were 6.5 times more IT job openings than talent to fill them, according to recruiting analytics firm Datapeople.
According to a survey of over 500 developers by Stack Overflow, 25% of developers were actively seeking a new job, while 54% said they were passively open to new opportunities. And when considering a new role, 65% cited pay as the biggest reason for jumping ship. In a survey of 5,500 professionals by Adobe, nearly 35% respondents said they planned to switch jobs in the next year. Among Gen Z respondents, the likelihood of switching jobs was 21 percentage points higher.
At the other end of the spectrum, start-ups flush with cash from venture capital (VCs) lured tech talent to join their ventures. Representation of Fortune 500 companies, including Big Tech firms, fell 25% in the tech job universe as start-ups, unicorns, newly-listed public companies and non-tech companies increased their hiring for tech roles. It is therefore, no wonder that tech firms tried different ways to attract talent. Some companies even posted jobs without explicit degree requirements from candidates. Such postings grew almost 25% last year. But top tech firms still prefer Master’s Degree or an MBA more than ever with 25% more of their jobs asking for them.
Despite taking the pains to build a bulky talent bench, top tech firms are now hitting the brakes on hiring.
Google CEO Sundar Pichai told employees in July that the company would reduce the pace of its recruiting efforts for the rest of the year. Microsoft has said that it would remove several listed job openings. Apple has also said it will slow its hiring for the rest of the year as it prepares to weather a potentially tough economic climate. The iPhone maker has 1,54,000 employees as of September. Amazon, the biggest tech employer, said back in April that it was going to slow its hiring as it is overstaffed.
The hiring re-think comes at a time when VCs are tightening their purse strings due to geopolitical, supply chain and economic uncertainty. They are now more selective in their bets, with a strong focus on fintech and cleantech, according to a quarterly report on venture funding by KPMG.
“With valuations declining, many tech companies performing poorly on the public markets, and no end in sight to the level of geopolitical uncertainty, notwithstanding other challenges facing the VC market globally, we’re starting to see investors instructing their portfolio companies to preserve cash.” said Jonathan Lavender, Global Head, KPMG Private Enterprise, KPMG International, commenting on the venture pulse report.
The hiring freeze at Big Tech, tight money supply from VCs to start-ups, and a gloomy macro-economic environment could bring tech jobs and talent to an equilibrium point where demand meets supply. Perhaps, the September ending quarter will shed more light on it. But, until then Big Tech firms that gobbled up human resources in the last two years can sit tight and re-prioritise where to deploy their new hires.
