Why recession is bad news for the Deep Tech industry
As the cost of living continues to rise many people that might have been tempted to look will stay in their secure jobs. My belief, to this point, is that the recession we face at the end of 2022 and into 2023 may cause companies to take pause but that hiring will still continue. Many companies will reduce hiring by highlighting their top 20% of hires or by putting an extra layer of authorisation into the process. Some will pause hiring for a few months, Enigma People Solutions has already experienced this with candidates at the offer stage being told authorisation to recruit has been suspended.
This is bad news for the Deep Tech industry as it makes an already limited supply of candidates more cautious than ever and possibly reluctant to make a move at what they might see as a slightly risky time to move. For candidates, fortune favours the brave and my advice to all is to stay open to opportunities. Now we have seen a small number of companies taking more serious action of right sizing and with that comes some redundancies. The good news for those individuals affected by redundancy in the deep tech sector is that there are still plenty of options for them as the number of companies recruiting still outweighs those that are not. It is often the case that we see some companies emerge stronger and larger through recession periods as they take the chance to hire great people. Now is a good time for candidates to look at options!
According to economic data, recessions typically last between 8 to 18 months. https://www.kiplinger.com/slideshow/investing/t038-s001-recessions-10-facts-you-must-know/index.html
What I expect to see
Companies being more cautious, reducing costs, just in case, and therefore recruitment reducing significantly whilst at the same time candidates looking for a safer haven or even just an uplift in salary to match or hopefully outpace inflation. As other companies batten down the hatches this is an opportunity to attract those who see cost saving in their existing company as the motivation to move on, especially as so many people have held off making career moves over the past 2 years.
Pressure on salaries – as cost of living continues to rise and the media pushes this as a constant theme people will review their pay packets and pay rises more clinically (we are already seeing this in the public sector). Money and pay will again be a key motivation for people to move.
So what should companies to do about this?
Companies make sure you review the threat and risk of your salaries – are they falling behind the market? Recognise you may need to raise salaries to look after and retain staff, also you will need to be competitive to attract staff. Let’s not kid ourselves that our great culture, interesting work and flexibility will be the deciding factor always, sometimes money will do the talking.
It seems odd and contradictory to suggest increasing salary costs at a time when materials and utility costs are skyrocketing but spending money on replacing people in a difficult market is even more contradictory. I do not expect to see significant layoffs and getting well engaged staff to move will be even more challenging, so retention is key here. Staff retention is way less expensive than recruiting new staff!
What about prospect candidates?
If you are thinking of moving career, now is the time! Get that new well-paying job in a company that is strong and growing and has interesting work now before things really slow down. You don’t want to be stuck in a recession.
For prospect candidates, in times like we are entering, companies tend to be more cautious and will only hire their perfect match so be prepared for more rejection but also be prepared to speculate. You never know! It could be you!
My hope is that this recession is a short one and that the robust and strong nature of the deep tech industry in the UK will mean that it continues to invest and innovate through the next 2-3 quarters with little negative impact. One thing that will not change is the relative shortage of talent, so retention is key as is smartly using this time to attract and recruit the right people for your business.
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