What AU SMEs Can Learn from Tech Lay-Offs

For years, the tech industry had lower lay-off rates compared to other sectors, enabling them to attract the best talent thanks to perceived job security. 

However, as of December 2023, the total number of tech sector lay-offs worldwide is estimated to surpass 262,000. This trend is still going on well into 2024 — and Australia is not an exception. 

Tech Sector Lay-offs in Australia

Australia’s tech sector has not been immune to challenges, with lay-offs plaguing the industry at the start of 2024. 

These developments have been surprising given the improved financial standing of many AU companies.

Since 2023, several Australian tech companies have trimmed down their workforce, reflecting global trends in the tech industry. 

For example, the software platform, Linktree, sacked 27% of its workforce. According to co-founder and chief executive officer Alex Zaccaria, the decision was not taken lightly. 

However, it was a necessary move to allow the business to pursue growth opportunities in other countries. 

Potential Reasons for Tech Lay-offs 

The trend towards reducing workforce numbers persists, highlighting a range of deep-seated issues affecting the sector. 

Some potential reasons for these lay-offs include:

• Market Correction. After rapid growth fueled by easy access to capital, the tech sector might be experiencing a correction as investors become more cautious due to rising interest rates or a global economic slowdown.

• Shifting Priorities. Companies might be refocusing their resources on core competencies or emerging technologies like artificial intelligence, leading to job cuts in other areas. 

For instance, Australian software company Atlassian laid off 500 employees when it shifted its focus on key areas such as cloud migrations.

• Global Restructuring. Multinational tech giants with Australian offices might consolidate operations or streamline processes worldwide, leading to local job losses. 

One example is when Twitter shuttered its local office in Australia last January 2023 as part of CEO Elon Musk’s widespread lay-offs. 

Economic and Strategic Factors Leading to Lay-offs 

At the core of the lay-offs are several interrelated factors, such as: 

• Economic Downturns. Economic downturns have played a significant role, as businesses across all sectors tighten their belts and reduce spending. 

• Consumer Behaviour. Consumer behaviour has also shifted, with preferences and demands evolving more rapidly than many businesses can adapt to. 

• Overseas Technology Services. However, one of the most critical factors specific to the Australian context is the heavy reliance on overseas technology services. 

This dependence has led to a significant capital outflow, as Australian companies spend considerable amounts on platforms like Android, Ads, Maps, and Search. 

Such reliance has arguably restricted the growth and resilience of Australia’s domestic tech industry, making it more vulnerable to global economic pressures.

The Impact of Tech Lay-offs Across the Board 

The tech lay-offs affected both industry behemoths and emerging startups. 

In January 2024 alone, big tech companies like Google and Microsoft, as well as dozens of smaller startups have collectively shed nearly 25,000 tech workers. 

This wave of job cuts through 2023 and into 2024 indicates a broad-based restructuring rather than isolated incidents. 

Yet, the specifics regarding which companies are cutting jobs and the roles most affected remain somewhat vague, adding to the widespread uncertainty in the industry.

Opportunities Amidst Challenges 

While the recent lay-offs cast a shadow over the Australian tech sector, this period of turbulence also presents a unique opportunity for strategic reassessment and growth. 

Here’s how businesses can leverage this situation:

Opportunities for Business Owners in the Tech Sector 

There are several opportunities for tech business owners, even amidst lay-offs: 

• Capitalising on Emerging Tech Trends. Tech entrepreneurs can focus on identifying underserved niches and developing solutions to cater to their specific needs. 
• Embracing New Technologies. Innovation is key to staying ahead of the game. 

Thus, business owners in the tech sector must stay abreast of new technologies like blockchain, the Internet of Things (IoT), and artificial intelligence. 

• Prioritise Cybersecurity. Reliance on technology will continue despite the lay-offs and the demand for robust cybersecurity solutions remains high. 

This enables tech entrepreneurs to offer network security, ethical hacking, and data protection services. 

Opportunities for Business Owners in the Non-Tech Sector 

Non-tech businesses can also find various opportunities, even during massive tech industry lay-offs. 

• Catering to Essential Services. Affected workers will potentially re-evaluate their spending habits, allowing businesses that cater to basic needs to offer competitive pricing and promotions. 
• Capitalising on Availability of Skilled Talent. The influx of talented individuals from the tech sector is an opportunity to hire professionals with diverse skill sets. 
• Leveraging Technology for Efficiency. With skilled tech professionals on board, non-tech businesses have expert assistance in building customer service channels and user-friendly websites. 

Rethinking Technological Investments 

The recent surge in tech lay-offs prompted many entrepreneurs and business owners to reevaluate their technological investments. 

However, a complete rethinking of all technological investments isn’t the most prudent course of action. Instead, business owners can look at it from a more balanced perspective.

• Focus on Core Competencies. Businesses can analyse their current tech stack and identify areas where they might be over-reliant on external solutions. 

This could lead to exploring in-house development or acquiring smaller, niche tech companies to solidify core functionalities. 

For instance, an e-commerce platform might decide to invest in building a robust recommendation engine in-house, instead of relying on a third-party service.

• Prioritise Automation. Implementing automation solutions for repetitive tasks can free up employee time for more strategic work. 

This can involve robotic process automation (RPA) tools, AI-powered chatbots, or data analysis platforms. 

For example, AU travel booking website, Wotif, automates customer service inquiries through an AI chatbot, allowing its human agents to focus on more complex travel arrangements.

• Invest in Emerging Technologies. While market corrections might make investors wary, strategically focusing on emerging technologies with long-term potential can reap significant rewards. 

This could involve exploring artificial intelligence, blockchain, or cybersecurity solutions tailored to specific business needs. 

A logistics company such as Australia’s Qube Logistics, for instance, could invest in blockchain technology to create a more transparent and secure supply chain management system.

Embracing Sustainable Practices 

Tech lay-offs also allow entrepreneurs to embrace sustainable practices, offering numerous benefits for business owners. 

• Supporting Local Tech Initiatives. Partnering with local universities, incubators, and tech accelerators fosters a collaborative ecosystem. 

This can involve co-developing projects, mentoring startups, or providing internships for budding tech talent. 

By supporting local initiatives, SMEs can access a pipeline of skilled professionals, stay updated on emerging trends, and potentially gain access to innovative new technologies. 

For instance, a financial services company could partner with AU fintech startups to develop a new mobile payment solution.

• Leveraging the Global Talent Pool. While some companies are opting to insource, the current tech landscape also presents compelling reasons to consider outsourcing talent:

• Access to a Wider Talent Pool. Outsourced development teams allow access to a global pool of skilled professionals, offering a wider range of expertise and experience than might be readily available locally. 

This can be particularly beneficial for SMEs seeking niche skill sets or specific project needs.

• Cost-Effectiveness. Outsourcing can be a more cost-effective solution, especially for tasks that are not a company’s core competencies. 

This allows SMEs to free up resources for strategic investments and potentially benefit from lower labor costs in certain regions.

• Scalability and Flexibility. Outsourcing teams can be readily scaled up or down based on project requirements. 

This provides SMEs with greater flexibility to manage project workloads and avoid the fixed costs associated with full-time staff.

However, as early as 2007, many Australian business owners and entrepreneurs have been partnering with Remote Staff for their outsourcing needs. 

Businesses in the AU tech sector outsource software development and maintenance, IT infrastructure management, and quality assurance testing, among others. 

Meanwhile, non-tech industries delegate content creation, digital marketing, data entry, human resources, and other non-core business functions. 

Outsourcing also allows AU businesses to scale their operations and workforce based on current project demands. 

Done right, it can be used as a precautionary measure to avoid further lay-offs in other areas of the company. 

The SME Advantage 

Small and medium enterprises (SMEs) are particularly well-positioned to benefit from the current situation. 

Their agility allows them to adapt quickly to changing market dynamics and seize opportunities as they come.

• Attract Top Talent. By offering a dynamic and growth-oriented work environment, SMEs can attract highly skilled professionals seeking more ownership and impact with their work. 

This can be a great opportunity to build a loyal and dedicated workforce.

• Drive Innovation. The influx of talent can lead to a surge of fresh ideas and innovative solutions. SMEs can leverage this to develop niche products and services tailored to specific market needs. 

This can create a competitive advantage and allow them to capture market share.

• Contribute to Economic Recovery. As SMEs grow and innovate, they create jobs, stimulate the local economy, and contribute to Australia’s overall economic recovery.

Small and medium-sized enterprises (SMEs), in particular, stand to gain from the current situation. 

The increased availability of highly skilled tech professionals, who might previously have been out of reach, offers a chance to drive innovation, enhance operational efficiencies, and create new, market-specific products and services. 

By tapping into this talent pool, SMEs can accelerate their growth trajectories and play a pivotal role in the broader economic recovery.

By adopting these strategies, businesses can not only weather the current storm but also emerge stronger and more sustainable in the long run. 

The Australian tech sector might be experiencing growing pains, but within these challenges lie hidden opportunities for those willing to adapt and embrace change.

Building a Stronger Future 

The lay-offs underscore the pressing need for Australia to foster a self-sufficient tech industry. 

Strategically investing in talent and technologies not only serves to buffer the economy against global shocks but also promotes innovation and competition within the domestic market. 

By prioritizing the development of a vibrant, resilient tech sector, Australia can secure its position on the global stage as a hub of technological excellence and innovation.

In conclusion, while the tech lay-offs of 2024 pose significant challenges, they also offer a moment for reflection and recalibration. 

By embracing this opportunity for strategic realignment, Australian businesses can contribute to a stronger, more self-reliant tech industry, paving the way for sustainable growth and innovation in the years to come.

Click here if you want know more about the challenges of an increasingly tech-driven future or book a free consultation or request a callback to see how Remote Staff can help you with your remote staffing needs amidst tech lay-offs.