January's Tech Layoff Scourge: Deep Dive Into Channel ImpactJanuary's Tech Layoff Scourge: Deep Dive Into Channel Impact
We break down the seemingly daily layoffs impacting various companies doing business in the channel.
February 2, 2023
Layoffs dominated technology headlines in the first month of the year, and they haven’t spared the channel.
Tech giants Amazon, Google and Microsoft were among the biggest layoffs in pure numbers. Furthermore, layoffs significantly impacted most of their cloud units, where the channel plays prominently.
Channel to Benefit in Long Run?
While channel partners have rallied to support their colleagues to help them find new positions, here’s a contrarian view that actually provides some hope: The channel will benefit from the current spate of tech layoffs, according to analyst firm Canalys.
Canalys predicts that in 2023, the top 25 vendors will cut their collective headcount by 9% worldwide. This equates to 190,000 people. However, with so much potential talent opening up, channel partners could be able to take advantage. In particular, it might help them with recruiting and retaining much-needed employees.
In a recent LinkedIn post, Canalys CEO Steve Brazier noted: “Channel partners will be relieved that vendors will be poaching far fewer of their staff in 2023. Indeed, the relative stability of the channel makes them attractive places to work right now.”
Alex Smith, VP channels at Canalys, agrees a benefit of the tech layoffs for partners is less employee-poaching by vendors.
Canalys’ Alex Smith
“Anecdotally, it is one of the biggest challenges that partners faced during what was otherwise an excellent period (2021-2022). Vendor recruitment exploded during this time and that meant looking to both partners and customers for talent. Vendors can see those individuals that are certified on their products — and they are obvious targets. That activity will be far less this year,” Smith told Channel Futures.
Smith also agreed that with downsizing their sales teams, vendors will lean more on the channel in 2023. This, he said, was “another side benefit of vendor layoffs.”
“It will prove harder to build new momentum and partnerships, but those vendors that have already invested in partners, programs and other channel resources will have a strong platform to lean on those relationships.”
Behind the November 2022 projection of 190,000 people losing their jobs, Canalys said Amazon, Microsoft, Salesforce and Google would account for a combined 43,000 redundancies.
“The actual number is 48,000, so I think our projection is right on track,” said Smith.
New Pool of Technology Talent
The tech layoffs do create significant opportunities for channel firms, agreed Bev Markland, chief people officer at UK channel firm Agilitas.
Agilitas’ Bev Markland
“It opens up a pool of specialist technology talent that is normally very hard to find,” she said.
Keep up with our telecom-IT layoff tracker to see which companies are cutting jobs and the ensuing channel impact.
However, Markland said that to attract and retain the right candidates laid off from tech vendors, the channel must offer rewards that go beyond financial considerations and job security.
“Culture, progression, and training,” she said, “are quickly becoming vital factors for those seeking new job opportunities. She added that flexible working is a former “nice-to-have” which employees now expect.
“Additionally, for those people with sought-after digital skills, becoming part of the channel during its period of change will create a sense of purpose…They can see the contribution and change they are making to the company’s strategy and future.”
History Repeats Itself?
Once through this cycle, the key might be history not repeating itself, says Jim Campbell. Campbell is managing partner at Charlotte, North Carolina-based Opkalla, a technology advisor.
Opkalla’s Jim Campbell
“The 200,000-plus IT layoffs we’ve seen over the last year are not surprising considering the vast amount of hiring done during the pandemic. A lot of people in our space would argue the hiring was irresponsible, but the reality is the big tech players were fighting for the rare IT talent in the space. The talent gap is still very real, and in most cases the industry has more open roles than the current talent could fill. Every day we see another company announcing layoffs, and we expect to see some impact to our relationships.”
“What I fear,” Campbell added, “is the industry will have a short memory and in the not distant future we will see a major hiring push with inflated salary requirements.”
We asked Channel Futures editors to drill down on how layoffs are impacting their specific beats. The slideshow above offers a deep dive on job cuts among technology advisors (agents), cybersecurity vendors, the hyperscalers, EMEA and more.
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