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Waves of redundancies sweep through the local tech market

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Other local tech firms have also made proportionally large cuts, including 50 redundancies at healthcare platform Eucalyptus, equal to about 20 percent of its workforce, and a total of 90 job losses at residential solar power buy now, pay later financier Brighte. The first round of 32 losses represented a 15 percent reduction in Brighte’s headcount while the second round of 58 losses represented a 27 percent cut.

‘Scary’ outlook

Mr Gomes, who has landed a three-month contract with modular building company AusCo since losing his job at Nimble, said the outlook was “scary”. But riding the ups and downs of the tech industry appealed to him more than pursuing a career beyond IT.

Leaving the sector would be a waste of his skills and experience, he said. Having cracked open his first computer at just six years old, he said fixing things came easily to him. “And I like that feeling of helping people out as well.”

His redundancy is an illustration of a wider slowdown in the tech industry as start-ups that went on a hiring frenzy last year realized their growth targets were too ambitious and they now need to focus on improving efficiency.

Where employers were once paying over the odds to get staff through the door to meet surging demand for their services, now they are more focused on boosting the productivity of their existing employees and making fewer “panic hires”, said David Jones, senior managing director at recruitment agency Robert Half Asia Pacific, which specializes in administration, technology and accounting roles

Mr Jones said the tech hiring market had cooled since it peaked in June, but demand was still extremely high for cybersecurity professionals and those skilled in digital transformation. The difference now was that companies had become accustomed to hiring in this market and were less inclined to rush a decision due to the “fear of missing out”. Lifting productivity had become their focus instead.

Mindset Health co-founders Alex Naoumidis (right) and his brother Chris Naoumidis.

Companies trying to ‘get fit’

“[The threat of a recession next year] is making companies go, ‘OK, we’ve actually got to get fit again’,” Mr Jones said.

“‘We’ve got to think about what we’re going to do next year to achieve the same or better outcomes in 2023 that we achieved in 2022. We’re going to have to work a little bit harder, [and] smarter’.”

His reading of the market chimes with the experience of Alex Naoumidis, co-founder of digital hypnotherapy start-up Mindset Health.

Mr Naoumidis said his company had increased its headcount from 20 to 28 employees this year, having hired software engineers, product specialists and content and marketing professionals.

He told AFR Weekend that the company previously increased its starting salaries for engineers by between 20 percent and 30 percent to snare workers in a tight labor market. But since then, the market had cooled.

Coming off the boil

“We’ll have to see how it plays out next year, but it definitely feels like it’s not growing at the pace that it was,” Mr Naoumidis said.

Looking ahead, though, he said it was unclear whether the mass layoffs at the tech giants would make it easier or harder to find staff. Theoretically, the cuts increased the supply of available labor and would drive down wage demands from jobseekers. But the negative press surrounding the cuts could equally deter people from wanting to work in tech, Mr Naoumidis said.

“In our hiring process, we’re getting a lot more questions like, ‘What is your financial position? What are your fundamentals?’ [Jobseekers are] asking more about the business case, which I think is very healthy,” he said. “But it’s definitely noticeably changed since the layoffs.”

Nimble Australia was approached for comment.

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