Twitter’s recent move to downsize its office spaces globally has thrust the challenges facing the tech industry into the limelight once again.
he last few months have seen the industry dogged with headlines about job cuts, hiring freezes and valuations being slashed.
Twitter employs around 500 people at its European headquarters on Dublin’s Cumberland Street. It is one of several locations the social media company will be scaling back.
It will be subleasing the fourth floor of the building to another tenant. The other floors will continue to be used by Twitter staff.
The company has been quick to say that the reductions will not mean cutting any staff.
“We are evaluating our global office portfolio and re-sizing certain locations based on utilization,” a spokeswoman for Twitter said.
“We’ve proven we can operate our business successfully with a distributed workforce over the years, and remain committed to our employees, our customers, and the markets we serve.”
‘If you have a team of 500, you’re not going to have 500 desks. Maybe you’ll have 100 desks and ample space for collaboration’
TikTok meanwhile reportedly stopped talks on another new office space in the city. TikTok would not comment on its Dublin real estate.
Plans to hire a further 1,000 people in the city and to fill up the Sorting Office building, for which it signed the lease last year, remain in place.
That some large tech companies are re-evaluating their property footprint is not a surprise, said Aislinn Mahon, who is head of growth and operations at co-working space Huckletree.
“It’s not a huge surprise. They probably over committed too much space. I think it’s always going to be important that they have a home, somewhere they can bring people in.”
Coupled with the greater prevalence of remote work brought on during Covid-19, reassessing real estate volume makes sense as a cost-cutting effort.
“The format has changed. If you have a team of 500, you’re not going to have 500 desks. Maybe you’ll have 100 desks and ample space for collaboration,” Mahon said.
“Things are changing really quickly so it’s around being nimble and not signing yourself up for really long commitments that don’t match your planning cycles.”
Reducing physical space is proving to be another litmus test for how the tech industry is coping in trying times along with trimming down workforces in preparation for a looming recession.
All of these moves raise questions for Ireland about its ability to attract new or further foreign direct investments from companies that are now more conservative with their purse strings.
Presenting its latest half-year report, IDA Ireland said that while performance for the period had been strong, there were indications of a slowdown in deals being made with a “difficult operating context” ahead.
That context could influence FDI companies’ plans for Ireland, including those that recently put pen to paper on new office leases.
In June, Toast, which makes software for the hospitality industry, expanded in Dublin with the opening of its new, larger office with a commitment to 100 new jobs. It already had an existing presence in the city.
‘International companies don’t really want the headache of taking their own space at the very beginning’
Since that announcement, the tech slowdown has tightened its grip globally but a spokeswoman for Toast said the company remains on track to fill the roles in Dublin.
“We continue to invest in Ireland to grow and meet demand, most recently with the opening of our new Dublin office.”
But whether all of the Irish staff will be using Toast’s new base on St Stephen’s Green remains to be seen.
“This [hiring] currently includes a mix of office-based, hybrid and remote experiences, and we continue to learn and adjust our approach as our needs evolve,” the spokeswoman said.
Square, the fintech giant led by Twitter founder Jack Dorsey, has had a presence in Dublin for several years too. That has gradually grown into the main hub for serving its European business and it announced plans late last year to add 30 more jobs in the office, bringing the workforce to 150.
While the company has moved to a hybrid model for employing people across Ireland, it is maintaining its current office space in Dublin.
“We offer a fully flexible model with team members based all over Ireland, and we encourage people to work wherever they feel most creative and productive,” a spokesperson said.
For companies that set up beachheads in Ireland recently but have since been cutting staff, it is unclear what shape their future presence here will take.
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I think there’s certainly going to be a little bit of a silver lining, in terms of hiring by smaller companies and start-ups, says Sarah-Jane Larkin, director general, Irish Venture Capital Association. Photo: Chris Bellew/Fennell Photography
Sendoso, a gifting software company, opened its European headquarters in Dublin last September after raising $100m (€98m) from investors. It announced plans to create 100 jobs here but in June of this year it slashed its overall workforce by 14pc.
Sendoso did not respond to a request for comment on the status of its Irish expansion.
Peloton, the exercise bike maker, is another company that has been beset with challenges over the last number of months.
It recently cut 784 people from its North American workforce as well as announcing plans to shut down stores.
The company has faced difficulties since late 2021 after demand for its products, which surged during lockdowns, plummeted.
During this time it has been preparing to open a Cork office. It was reportedly reconsidering the size of the office space it was planning to take in the city.
This newspaper reported in November of last year that Peloton still intended to pursue the Cork operation despite job cuts at the company around that time.
A spokeswoman for Peloton told the Sunday Independent this week that it has no updates to provide on the office.
Huckletree’s Mahon said the approach of internationalizing companies will continue to change as many will take a more cautious approach to real estate.
“We’ve definitely seen a pickup in overseas companies coming over again,” she said of companies opting for shared spaces rather than dedicated units.
“[International companies] don’t really want the headache of taking their own space at the very beginning. The focus really is on getting the product right for the market, getting your team, your people, and establishing your culture,” Mahon said.
Financial services software firm Genesis is the latest US outfit to set up in Ireland with this model.
It is a theme that Mahon expects to continue as Huckletree is currently scouting buildings for a second location in Dublin.
“While we are eager to expand, we will do it cautiously.”
A role at a major tech company may not hold as much sway for engineers and developers in this new environment
Ructions globally in the tech industry will have effects on the local ecosystem too.
Any changes to the profile of big tech investments in Ireland and how they hire here will have an influence on Irish start-ups, according to Sarah-Jane Larkin, director general of the Irish Venture Capital Association.
“The one thing that has been a really consistent message from a lot of the start-ups in Ireland that have been funded and are growing is that the real crunch point has been talent and attracting people and retaining them. A lot of that has been in the face of what we’d call the warm embrace of the US multinational,” she said.
Larkin believes that a role at a major tech company may not hold as much sway for engineers and developers in this new environment and they may be “more likely to take a punt on a start-up” now.
“In one way, this sort of a slowdown or the fact that there might be a little bit more uncertainty around careers in some of those companies at the moment, it’s not a bad thing for venture-backed companies and for early-stage companies. I think there’s definitely going to be a little bit of a silver lining,” she said.
“It feels like there’s a foot off the accelerator in the frantic pace of hiring people and switching jobs, all of that is just going to slow a little and moderate a little and that’s probably a good thing for the health of our sector overall.”
However, companies that have recently secured funding rounds will be better placed to weather any coming storms and take advantage of those silver linings compared to those currently pitching investors.
Pierce Dargan, founder of animal tech company Equine MediRecord, does not totally agree with the assessment that competing with FDI companies for talent might get a little easier.
He said that while some large companies have cut jobs or frozen hiring, eventually they will be hiring again and with that, competition for talent will heat up once more.
Equine MediRecord recently secured an investment of over €10m and is now seeking to hire in Ireland and internationally. It must still contend with high expectations from candidates, standards that have been set for years by the large tech companies.
“You’re dealing with the expectations. Even those people who have been laid off from larger companies, the expectation of the salary that they would get from a multinational would be very different from what you’d get from a small business. That’s the way it is. Even if you can match the salary, it’s the added benefits that you can get with a corporation,” Dargan said.
“There is an expectation set by people working at those companies even if there is a downturn, those expectations are there. Can you match them? That’s the challenge that small businesses have to face.”