Warning sign or temporary lightning?

Earlier this year, the biggest recruitment issue facing the tech sector in Ireland was a lack of talent.

There has been a strong demand for IT professionals, creating competition among employers to hire workers.

“I’m paying too much for average candidates,” I remember the head of a large multinational technology company in Ireland telling me a few months ago.

During the summer, however, things began to change.

Rising inflation, geopolitical uncertainty, rising energy costs, fears of a global recession and stock market sell-off have prompted many tech companies to cut costs and announce major cost-cutting plans to prepare for the uncertainty ahead.

In May, PayPal announced plans to cut 300 jobs in Dublin and Dundalk, with the company saying the decision was taken to grow the business and prepare for the next phase of growth.

Other tech firms have followed suit and announced plans for the ‘next phase’.

In August, US payments processing company Yapstone warned of possible job losses among 65 staff at its global headquarters in Drogheda.

A few weeks later, Canadian investment firm Clerco announced it was closing its Irish operations, with the loss of 50 jobs. Just six months ago it announced plans to create 125 jobs in Ireland.

Earlier this month, Irish-based software company Intercom announced 49 job losses, including 23 in Ireland as it prepares for a “low growth market environment”.

On Tuesday, independent artists’ membership and payment platform Patreon said it was closing its Dublin office and relocating nine of its Dublin engineering staff to join its US-based teams.

The company said the technology industry and the economy as a whole have changed dramatically over the past nine months.

Also in recent days, US cloud communications company Twilio has announced plans to cut 11% of its global workforce to cut costs.

260 people are employed at the firm’s European headquarters in Dublin, some of whom are expected to be affected by the cuts.

While they haven’t announced any major layoffs, some of the largest tech companies with headquarters have shelved plans to expand their office space.

In July, Facebook owner Meta said it was putting the finishing touches on its new Dublin base in Ballsbridge on hold while it assessed demand for the property globally.

Also that month, Twitter said it was relocating its Dublin office, home to the company’s European headquarters. The move resulted in the fourth floor of the office building being taken offline and leased to another tenant.

Globally, many of the biggest tech companies have announced hiring freezes as they reassess their future plans.

New research released on Tuesday found that demand for employment in Ireland’s technology, IT, telecoms and media sectors has fallen sharply.

According to the ManpowerGroup Employment Outlook survey, net employment in the sector for the fourth quarter fell 25 percent compared to the previous quarter.

“Businesses that had confidence in hiring in the technology and IT sector last year will now need to downsize rather than hire new workers to grow,” said John Galvin, managing director of ManpowerGroup Ireland.

Strikes in the technology and IT sector have become more popular in the last quarter, a change that may have been caused by the large tech companies that have recovered from the disease as their markets have reopened and now find themselves with a surplus of workers. “This is now forcing them to get rid of their recent hires and withdraw some job offers,” he added.

Over-hiring seems to be an issue for some companies during the Covid-19 pandemic.

Business boomed when the world went into lockdown and forced people to do everything online, but now that things are reopening, some companies are finding they have too many workers.

In July, Canadian e-commerce company Shopify announced that it was cutting 10 percent of its global workforce, admitting that its rapid expansion has been hampered by the impact of Covid-19 on business.

“Ireland was Shopify’s largest site outside of Canada, and by 2021 the company announced plans to hire more than 2,000 engineers worldwide,” Silicon Republic editor Elaine Burke said.

“That decision was made when Shopify reported pandemic-led e-commerce growth, but laid off 10 percent of its workforce, the CEO making a wrong bet that growth would continue to accelerate,” he added.

In the tech sector, the hiring slowdown and layoffs seem to be affecting some positions more than others.

“I don’t think you’re going to see huge job cuts in engineering and cyber security because at the end of the day, software and cyber security still have a skills shortage, but what we’ve seen are cuts in sales, marketing and management teams, support and human resources,” Ms Burke said.

Technology Ireland, the IBEC group that represents the technology industry, warned this week that there were signs of a growing slowdown in employment.

The group called on the Government to use Budget 2023 to focus on areas such as talent, skills, tax, improved infrastructure and making Ireland a European hub for international regulation.

“Ireland remains at the heart of Europe’s tech industry, but we cannot afford to be complacent and must continue to focus on growing our talent, especially at a time when companies are evaluating and in some cases delaying hiring,” he said. Director of Technology Ireland.

“At a time when inflation and infrastructure pressures are weighing on the economy, there are signs that employment is slowing.”

“Budget 2023 must be capable of putting inflation and infrastructure gaps in the teeth of growth. This budget must strengthen our ability to thrive in the future, by investing in skills, focusing on research and innovation and increasing our regulatory capacity,” Ms. Fitzpatrick. Added.

According to IDA Ireland, there is a tech reboot taking place in an uncertain global landscape, but despite this, recruitment and hiring at large tech companies in Ireland has remained strong so far.

The agency is pointing to recent announcements of new investment and job growth by companies such as Intel in Kildare, Analog Devices in Limerick, Ericsson in Athlone, Tatari in Galway, Cassia in Dundalk and IBM in Dublin, Cork and Galway.

“Rising interest rates and challenges in global energy markets are a concern, and there are limited job losses at some companies, due to increased caution in the face of increasing global uncertainty, however IDA is cautiously optimistic about pipelines in the coming months.” Technology investments,” said an IDA Ireland spokesperson.

“This is driven by a number of trends, including an increase in the speed of digitization, which has led to a corresponding increase in demand for IT hardware and software.”

“The sustainability agenda is also a strong trend going forward,” the spokesperson added.

So, is the current slowdown a temporary blip or a sign of dark days ahead for Ireland’s all-important tech industry?

Silicon Republic’s Elaine Burke says what’s happening right now is a correction, especially for organizations that have overextended themselves.

“Many companies are preparing for a tough business environment, so it makes sense for them to reduce staff. It is very difficult for people who will lose their jobs, but the companies are not doing anything surprising, rather they are responding to the current economic situation,” she said.

Despite the decline in hiring in the tech sector, there is still job growth, much of it led by smaller companies as larger players scale back their hiring plans.

This means startups and scale-ups can now find it easier to attract employees and grow their businesses.

When it comes to the IT industry, it’s all about the cloud and perhaps this has a distinct silver lining.

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