Industry slowdowns don’t mean it’s time to get out—just time to get prepared.
Looking at the tech scene right now, you might be forgiven for feeling like the sector is in a bit of a free fall. Just a few short months ago, tech companies were rocketing upwards to help the world adapt to pandemic-related lockdowns, and it seemed the entire industry had the Midas touch. Then, in the beginning of 2022, it started to change. Markets began to soften, and then decline, with virtually every major tech stock—including stalwarts like Apple, Shopify, and Meta—plummeting in valuation, and losing anywhere from 25 to 75 percent of their worth. And when Canadian giants Thinkific and Wealthsimple began to announce significant layoffs, it became clear that endlessly rosy tech forecasts were off the mark.
Maybe you’re considering a career in tech, or you’re already well down the path and upskilling with one of Palette Skills’ programs in tech sales or cybersecurity. If you’re feeling a little nervous, that’s completely understandable. However, let’s dig deeper into what’s behind the tech slowdown, and look at where the Canadian tech industry is headed. Spoiler alert: it’s not as bad as you think.
Why all the layoffs?
It would be great if there was one simple reason to explain the current downturn, but as usual, reality is always complicated. Here are two things we know: A pandemic-strained global supply chain collided with a massive geopolitical crisis when Russia invaded Ukraine in February 2022. These two events caused further hiccups in the production and shipping of everything from oil to grain and even semiconductors.
This has led to the largest surge of inflation in nearly four decades – it’s now 8.1 percent in Canada and higher in the United States – which in turn has prompted central banks all over the world to hike interest rates higher and more quickly than anticipated.
How does that translate into layoffs? One of the potential adverse effects of these central bank rate hikes is something nobody wants right now—a recession. Economic uncertainty tends to create a vicious cycle of governments reacting to inflationary fears, which in turn prompts investors to react to fears of recession by selling off stocks. See where we’re going? Stock selloffs impact corporate value, which means that companies respond by trying to cut costs—which means laying off employees.
But it’s not all doom and gloom, especially here in Canada.
In comparison with their American counterparts, Canadian tech companies have fared relatively well during this downturn. In a recent article for CBC, the CEO of Waterloo-based incubator Communitech Chris Albinson says this is the case because generally speaking, Canadian tech firms tend to be better stewards of capital.
To put it in perspective, a report from Crunchbase puts the tally of American tech company layoffs at more than 30,000 in 2022 so far. In contrast, Canadian tech companies have laid off around 1,600 employees in the same timeframe, according to the layoff aggregator layoffs.fyi. Even when we take into account the larger size of the U.S. tech scene, it’s clear that Canadian tech companies aren’t hemorrhaging the way American companies are.
How to prepare for the unexpected?
No one ever wants to think they could be let go from a job they love, but it’s always best to be prepared. If you haven’t done so already, update your CV with your current position, and make sure you highlight the impact you’ve had there, including any tangible results from projects or sales campaigns.
If you’re a graduate of a Palette Skills training program, you already know how important it is to actively network in your industry. Now is the time to reestablish yourself in those circles, and put out those feelers so you can connect with potential employers.
Beyond these kinds of career-related preparations, there are financial steps you should take to make sure an unexpected layoff doesn’t hit too hard. Take an honest look at your finances, and start tracking your spending. Bite the bullet and create an emergency fund that will cover your expenses for at least one month, and preferably three months or more. Start a separate savings account for emergencies if you don’t yet have one, and set up automatic deposits from your chequing account so that it grows without you having to worry about it.
Continued growth, continued hiring.
Despite the slowdown, there are plenty of technology-adjacent companies, particularly in finance, that are hiring. According to the Canadian Press, employees affected by recent layoffs are being snapped up by these other companies, sometimes within hours of being let go from their old positions.
In fact, there continues to be investment in Canadian tech startups from both the public and private sectors. The Globe and Mail recently reported on the growing trend of large corporations like General Motors, Canadian Tire and Bell building out their venture capital arms, and funding innovative Canadian talent. Federal and provincial governments are keen to put money into programs that support companies building green infrastructure technology, both nationally, and around the world.
Despite the headlines, existing tech incubators supported by both private and public funding continue to thrive and private investment firms are committed to pushing Canadian tech forward on the global stage. The bottom line is that, even with this hiccup in the industry, there continue to be opportunities—you just need to prepare for them.
