True or False – is tech hiring slowing down? I believe the answer is both, true and false.
There is undeniably a slowdown in VC funding in the Bay Area as of late 2015 with all the unicorns and even giants falling in valuations due to “tech corrections”. Fundraising is not as easy as it was before because the bar has been set a bit higher for startups who are raising money. I know this because we fund raised our seed fund of $1.5M in late 2015 right before things started to slow down and right now we are gearing towards another fundraising round. The money is there, and investors are investing left and right even in the Valley, but we do see a slowdown of seed money invested and more of latter rounds as indicated by CrunchBase January 2016 and MatterMark. It almost seems like as if investors suddenly got smarter with their investments (no pun intended). Good companies that performed well are still raising successfully especially with all the hundreds of millions invested just late January 2016.
How does this translate to hiring? Well, hiring is slowing down yes, but that’s mostly because open job positions that have been there for a while are now filled. Fewer jobs are being offered by seed stage companies and fewer new job positions overall, but what are we comparing this to? Is hiring now much worse than the .com boom in 2004? Is it much better than the bust in 2008? Let’s look at the data. Let’s observe Google Trends search in the US which indicates what people search for that month and year signaling level of interest for hiring and recruiting?
The answer is it’s a lot better than 2008 bust, but about the same in 2004 boom. One interesting thing we can observe from this graph is that hiring is indeed in full swing but the acceleration slowing down, and recruiting is picking up exponentially. There are three reasons simple reasons why this is happening. First, we are running out of is left of unemployed or underemployed tech talent caused by the slower economy since the last regression. The active talent pool is smaller, and the passive talent pool is getting bigger, less responsive, and hiring managers are increasingly pickier. Second, the easy jobs got filled leaving the most challenging roles open. Third, the market has become so saturated and competitive for tech talent especially in the Valley.
Comparing this January 2016 to January 2015 on Indeed, hiring is in full swing across all industries especially the +136% in transportation and +20% in IT compared to same time last year. However, looking at last quarter and month in IT sector, we can see zeroes or negative figures in growth. Anyone who took college Physics or Calculus can mathematically derive that although the quantity of hiring is very high and in full swing and yearly velocity/growth is amazing, monthly velocity is becoming negative, which means that the acceleration is slowing down, and we are near the peak of the hiring boom. We are in the early beginning of stage from points B to point C in the picture. For example, the IT industry graph validates this even to date (April 2016).
My advice for job seekers for the next few months is to act fast on any offers they get before the open jobs are gone and hiring slows down. If you are considering switching careers or change now, act fast. There is still a good window. Who knows things might pick up after a while, it’s the economy after all. One thing is for sure, when the economy goes up, it must go down eventually. Looking for a job in a recession is tough. From my personal experience, I graduated from Cal and fundraised for my previous venture during the recession in 2012, and it wasn’t easy to secure funding then. It is much easier even now after tighter VC funding. Many of my engineering friends who graduated in 2012 couldn’t find a job for more than one year. Don’t wait for that to happen.
Ninh Tran, CMO at Hiretual, a Recruiting Power Tool made by Recruiters for Recruiters
Hiretual – Your Recruiting Assistant
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