The headlines of the past week are worrying: the giants Google and Microsoft are eliminating 12,000 and 10,000 jobs respectively in one fell swoop. That’s a lot of people; if we wanted to accommodate all these people in one place in Montreal, we would have to go to the Olympic Stadium, because there would be just a shortage of seats at the Bell Centre.
The same week, Canadian champions like Lightspeed and Clearco cut hundreds of jobs in the Quebec City-Windsor corridor, and Vancouver-based Hootsuite is cutting dozens of positions for the third time in a year. We also learned that Britishvolt, a British company that still promised a few months ago a battery factory in Quebec, is bankrupt after having raised the tidy sum of 2.5 billion US.
Is the techno sector in total collapse? Should you panic, sell all your belongings and adopt a nomadic lifestyle in a tropical place?
No, a summary analysis will remind us every time that a sedentary lifestyle has its advantages. More seriously, we must avoid putting everything in the same basket and, above all, scratch a little to see that the giants and the growing companies make seemingly identical gestures, but live squarely in two different dimensions.
First, let’s put things in perspective. The 10,000 employees terminated by Microsoft represent a small fraction of the total workforce, less than 5%. Then the company has grown a lot in the past year, growing from 180,000 employees in June 2021 to 221,000 before the layoffs. On the net, Microsoft has therefore added more than 30,000 jobs, the equivalent of the entire active population of Blainville, in 18 months and a little. It therefore appears that despite the media noise and the very difficult days for the employees affected, we are quite far from the apocalypse. And know that the numbers are similar at Google.
For the less big game, it’s another story. Indeed, downsizing is often more worrisome, especially on the side of growth-stage companies (known as scale-up). Many clubs that once (last year) were encouraged by their board to hire anyone with a pulse are now being forced to cut their workforce by 10-50%.
However, where Microsoft is only trying to add 1 billion to its profit which had almost 18 in the last quarter, the scale-up make a significant sacrifice. Indeed, some, if not most, must slow down growth considerably to try at all costs to become profitable. By doing so, they reduce their chances of becoming a giant because, in the industry, speed of execution is almost always the key to large-scale success.
Many, however, have no choice but to make this sacrifice, since they must now demonstrate that profitability is not far off in order to obtain a next round of financing that will allow the fight to continue. For its part, Microsoft is sitting on more than US$100 billion in cash and seems to be having trouble spending all that money, partly because of monopolistic constraints that limit the companies it can buy.
So there’s a huge gap between growing companies and hyper-profitable giants, and the recent layoffs have to be seen in that light. However, in this case, Quebec and the rest of Canada do not have many technological titans, but quite a few medium-sized companies with big aspirations. The symbolism of a scale-up Who tears up Quebec, Montreal or even Toronto and fires 100 people is therefore quite other than a rounding error of 10,000 people on the west coast of the United States, even if it attracts much less attention.
PHOTO MARTIN CHAMBERLAND, LA PRESSE ARCHIVES
Lightspeed cut jobs last week.
An occasion
That said, even if Canada does not have a tech colossus of 200,000 employees, the IT industry is still quite large there. A CompTIA report published last year put the figure at 1.24 million jobs. We therefore understand that the abolition of a few hundred or a few thousand positions does not jeopardize the sustainability of the industry for the moment. On the other hand, we can expect that certain societies that are fairly well known to the public are threatened with extinction.
Remember that out of every crisis come opportunities. If you have lived on Earth for a few months, you know that we need more qualified people to help our businesses. Many small techno companies have even complained for years that they cannot find the talent they need to support their growth.
So here’s the chance: since the end of the Great Recession, we haven’t seen such a good time to recruit big guns who will inspire companies to push their limits and lead the next steps in value creation. Some are available now, and if they’re not publicly available, rest assured that the turbulence of the past few weeks is making them a little more alert to what might fall into their inboxes.