Quarterly Talent Snapshot - Tech Q2 2023

Foreword

Quarterly Talent Snapshot

Technology | Q2 2023

#1 Industry overview

Redundancies continue

Cybersecurity remains strong

Diversifying tech talent pools

#2 Labour market trends

Employers focus on upskilling staff

Pay increases struggle to keep up with inflation

Softest fall in candidate supply since March 2021

#3 Equity, diversity & inclusion

Disappointing Equal Pay data revealed

STEM ambitions must be matched by a commitment to inclusion

Lack of HR neurodiversity training

#4 Politics & economy

Spring Budget focuses on helping inactive people return to work

The economy still faces significant structural challenges

Conclusion

Foreword

Dr Gareth Owen, Morson Market Analyst

There was optimism across most sectors in the first half of 2023, with big investment plans and strong revenue growth. But much uncertainty lies ahead, as the UK economy is experiencing a turbulent ride, with a recession still likely in 2023.

Skills shortages and supply chain issues still represent the biggest obstacles to growth that breaks through pre-pandemic levels

The big opportunities and challenges that are stacked ahead of us will require a relentless focus on talent attraction and retention, concentrating on widening the talent pool through attention to welcoming diversity

There are about 4.7 million cybersecurity specialists working in a world that still requires about 3.4 million more to join their ranks,

#1 Industry snapshot

Lay-offs in social vs growth in cybersecurity

The technology sector continues to face large scale redundancies, particularly in social media companies, with fresh job cuts announced in Q2 by LinkedIn, Meta, Reddit, Spotify and Palantir.

The downturn has also been reflected in the recruitment sector, where companies with a focus on tech recruitment like Robert Walters, suffering a big drop in income and a 3% reduction in headcount.

In other areas of tech, like Cybersecurity and AI there are stronger opportunities for growth, as evidenced by Dyson, OpenAI, ARM although this isn’t regionally balanced as eight of the top ten areas for tech are in London.

Q2 also brings a reminder to sharpen up your talent strategy to tackle the challenges of a talent market that still remains competitive, and that exploring a more diverse talent pool can help companies to succeed.

Dyson

Dyson unveils £100m Bristol tech hub as part of g obal growth plans

The household appl ances giant has sa d it is ooking to establ sh a new base n the city which could be home to ‘hundreds’ of software and AI engineers

Arm

There are around 30 open vacancies for engineering ro es at the Bristol office, with the microch p designer expecting ts workforce n the region to cont nue to grow

OpenAI

ChatGPT owner OpenAI locating first international office in London as it seeks to attract AI talent outside the US

Industry Headlines

At the time of writing 891 tech companies around the world have axed over 222219 employees in 2023, according to layoffs.fyi

LinkedIn cuts 700 jobs and exits China in the latest round of tech layoffs in response to slowing revenue growth and chang ng customer behaviour The widespread layoffs have been justified as part of the sector’s reaction to unexpected financial challenges and contract ons n the global economy in the post-pandemic world, as the cost-of-living crisis bites

Meta to axe hundreds of jobs n London in fresh cost-cutting measures: Higher interest rates ead to the economy running leaner, more geopolitica instabil ty leads to more volatility and increased regulation leads to slower growth and increased costs of innovation

Reddit To Axe 5 Percent Of Workforce In a memo on Tuesday, CEO Steve Huffman reported y confirmed that Redd t will lay off 90 employees. In addition to this restructuring Huffman also reportedly stated that Reddit wil reduce its hiring for the rest of the year to about 100 people from an early plan of 300

Spot fy to cut two percent of its workforce. Sahar Elhabashi, vice pres dent at Spotify announced a “strateg c rea ignment” of the company by reducing ts workforce by 200 employees

Tech Talent Strategy

Nearly anyone can build or buy outstand ng technology, but very few can build recru t, retain, and inspire an outstanding tech team

Tech giant Palant r to cut scores of jobs in London. The Colorado-based data analytics business co-founded by bi lionaire Peter Thiel is consulting on proposals to slash as many as 75 jobs from the capita . That would represent a cut of just over 8% of its UK workforce, based on staffing numbers disclosed by the firm

Robert Walters fees shrink as recruiter is hit by mass tech sector layoffs and jitters in global jobs markets The London-l sted recruitment group s net fee ncome s ipped 10 per cent to £99 9mi lion on a constant currency basis for the quarter ending 30 June

Whi e many tech compan es have recently announced major ayoffs tech organizations stil face a compet tive talent market Only 13% of employers surveyed say they can hire and retain the tech talent they need most

There’s a silver lining to the rise and rise of cybercrime: as the wider tech industry reels from large-scale layoffs, security experts appear largely impervious to redundancy.

During Microsoft’s quarterly earn ngs call at the end of January, ts executive cha rman and CEO, Satya Nadella, pointed out that the annual turnover of its cybersecurity arm had hit the $20bn (£17bn) mark – up from $15bn the previous year. Only a few days beforehand the software g ant had revea ed p ans to lay off 10,000 workers in anticipation of an overall slowdown in revenue growth

The urgent need for diversity in tech

talent pools

The technology industry is crying out for talented individua s to join its ranks But all too often, top tech companies are drawing from the same ta ent poolsand they’re miss ng out on recruiting diverse graduates with a range of ski ls and experiences as a result

W ley Edge’s Divers ty in Tech report found that 21% of businesses hire graduates from top un versit es exclusively

Tech companies with layoffs Q2 2023

Why cybersecurity teams escaped big tech’s layoffs

Candidate availability expands at quickest rate for two-and-a-half years

The sharp upturn in candidate availability this month is a big concern for the economy reflecting the effects of a sustained slowdown in recruitment along with increasing redundancies across many sectors.

Employers are also tend ng towards temporary hires given lingering economic uncertainty And yet the labour market remains reasonably res lient, with notable demand for skilled workers, both permanent and temporary, across a multitude of sectors this month

The evident m smatch between open vacancies and the sk lls of available candidates needs to be addressed urgently and a concerted focus on upskil ing and reskill ng is long overdue

Staff recruitment held back by lingering uncertainty over the outlook

Recruitment consu tancies indicated that compan es cont nued to hesitate to take on add tional staff in June as uncertainty over the economic outlook weighed on hiring decisions across the UK

The latest survey data pointed to a solid fall n permanent staff appointments n June, albeit w th the pace of contraction easing from May's near two-and-ahalf-year record At the same time temp billings growth p cked up s ightly from May's recent ow but rema ned mild overall

There were 265,000

fewer vacancies in April to June 2023 compared to the same period last year

Candidate supply rises rapidly in June

The hiring slowdown and company ayoffs mpacted staff availability which rose for the fourth straight month in June Moreover, the atest upturn in overall candidate numbers was the sharpest recorded since December 2020, w th both permanent and temporary staff supply expanding at accelerated rates

Starting pay increases at softest rate since April 2021

Latest data revealed further marked ncreases in both starting sa aries and temp pay at the end of the second quarter Panel members frequently mentioned that the rising cost of living and compet tion for skilled staff had pushed up starting salaries and temp wages That said remuneration for both permanent and temporary staff rose at the slowest rates for over two years in June.

Vacancy growth eases to 28month low

Overall vacancies continued to rise in June but the pace of expansion softened for the fourth month in a row Furthermore the rate of growth was the softest recorded since the current sequence of rising staff demand began in March 2021

Underlying data ind cated that a slower uptick in permanent vacancies offset a quicker rise in demand for short-term staff

CEO diversity: why isn’t the face of leadership changing?

CEOs in the FTSE 100 are still overwhelmingly male and white, despite widespread corporate diversity efforts. A lack of adequate succession planning and risk aversion mean many companies are opting for what has worked in the past.

The sort of person who gets to lead a FTSE 100 company has been under the microscope for more than a decade Over this period several government reviews have examined the shortfall in female or nonwhite d rectors n blue-ch p C-suites Although progress has been made there’s stil a long way to go with on y 20% of FTSE 100 CEO's identifying as fema e or person of colour

According to Raconteur's CEO Index: Out of 97 FTSE 100 CEO's:

9 are women compared with 51% of UK popu ation

11 have come from a non-white European background (18% of the UK population are from an ethnic minor ty)

not one has publ cly come out as LGBTQ+ (3.5% of the UK popu ation are LGB and 0 5% say their gender identity is d fferent from their sex reg stered at birth)

not one has declared a disabil ty (people with disabilit es make up 21% of the popu ation)

Black and ethnic minority workers twice as likely to be unemployed

Black and other ethnic minority workers are more than tw ce as likely to be unemployed than white staff according to ana ysis from the TUC Women from ethnic minorities are hit even harder, facing an unemployment rate of nearly three times that of white men

The union body looked at the most recent labour f gures from the Office for National Statistics and found that the unemployment rate for Black and ethnic m nority workers was 6 9%, compared to 3 2% for white workers

Only half of LGBTQ+ workers feel comfortable being out at work

Only ha f of LGBTQ+ workers in the UK are comfortable being out about their sexual orientation with colleagues at work according to new research from Deloitte

Delo tte’s 2023 LGBT+ Inclusion @ Work report looks at the experiences of 5,474 LGBTQ+ people in the workp ace in multiple sectors across 13 countr es through the lens of sexual orientation and gender identity.

More than half of respondents (59%) think that allyship plays an important role in helping people be open about their LGBTQ+ identity at work

New review to boost employment prospects of autistic people

A new review designed to boost the employment prospects of autistic people has been launched by the Government to spread opportunity, close the employment gap and grow the economy

The Secretary of State for Work and Pensions, Mel Stride MP has appointed S r Robert Buckland KC MP to lead the review, wh ch w ll cons der how the Government can work with employers to help more autist c people realise their potential and get into work

Of FTSE 100 CEO's identifying as female or person of colour.

#3 Equity, diversity & inclusion in focus

Engineering culture in the UK is not inclusive enough according to the Royal Academy of Engineering

Engineering culture in the UK needs to accelerate its drive to become more inclusive, according to a new report from the Royal Academy of Engineering

The research commissioned by the Academy aimed to improve understanding of how engineers perceive the current culture of the engineering profession and whether it is attracting, developing and retaining the number and diversity of engineers needed in the UK.

From café worker to nuclear asset care, Freyja Ingham, Morson Projects

Freyja Ingham is Asset Care Team Manager at Morson Projects

Without much encouragement from her teachers to consider pursuing a career n STEM Freyja spent much of her early teenage l fe working in a local café, unsure of what to do. PathF nders speaks to her about her journey into engineering

I did STEM at GCSE kind of age and, you know, we went to the Big Bang Fair in Manchester and it was really good fun. But I guess I never considered it as a career path because my teachers never really pushed that.

Monetary Policy ReportMay 2023

The Bank of England's quarterly Monetary Policy Report sets out the economic analysis and inflation projections that the Monetary Policy Committee uses to make its interest rate decisions.

Inflation is too high. It has been around 10% since last summer.

In March prices were 10 1% higher than a year ago Inf ation has been around 10% since last summer well above the 2% target

Higher energy prices are one of the main reasons for this.

Russia’s nvasion of Ukraine led to large increases in the price of gas Households’ energy costs have almost doub ed s nce the start of ast year

Economic headlines

Businesses are charging more for their products because of the higher costs they face. There are ots of job vacancies as fewer people are seeking work fol owing the pandemic. That means that employers are hav ng to offer higher wages to attract job applicants Prices for services have risen marked y

The Bank of England have raised interest rates higher to make sure inflation falls

In total, they have ra sed our interest rate to 4 5% from 0 1% s nce December 2021 Higher interest rates make it more expensive for peop e to borrow money and encourage them to save That means that, overall, they w ll tend to spend less If peop e on the whole spend less on goods and services, prices will tend to rise more slowly That lowers the rate of inflation

Inflation is expected to fall quickly

To around 5% by the end of this year That doesn’t mean that pr ces will fall but they wil stop increasing so quickly.

Monthly GDP is estimated to have fallen by 0.1% in May following growth of 0.2% in April 2023.

Looking at the broader picture GDP has shown no growth in the three months to May 2023.

Production output fell by 0 6% in May 2023 after a fa l of 0 2% in April 2023, this sector was the main contributor to the fall in monthly GDP in May.

The construction sector fell by 0.2% in May 2023 fol owing a fall of 0 9% in April 2023, revised down from a fall of 0 6% in the prev ous publication

UK denies report of ready deal to rejoin EU's Horizon science scheme.

UK Prime Minister Rish Sunak's office den ed a BBC report that a deal for Britain to rejoin the European Union's Horizon scientific research scheme had been negotiated and was awa ting approva

No deal has been agreed upon and ta ks are ongoing Brita n ' s government said. The UK has been negotiat ng with the EU over rejoining Horizon after London and Brussels sett ed their d spute over post-Brex t trade rules governing Northern Ireland in February

Concluding thoughts

Dr Gareth Owen, Morson Market Analyst

Though the UK has much to be positive about in the first half of 2023, storm clouds are still on the horizon.

The UK continues to experience high inflation, but the medicine of higher interest rates could easily stall the economy and act as a drag on the journey out of the pandemic era.

Government appears to have lost focus on the key challenges the UK faces in growing the economy, as it is more concerned about short term measures to make quick impacts, before the next general election

The labour market remains very tight, with broad skills shortages, despite the supply of candidates across the job market having risen for four consecutive months. The continued inflationary pressures mean that more people will redouble their job search efforts and companies look to adapt their operations to battle against the challenges ahead.