Headwinds in tech spark job uncertainty
The world of business and technology has endured something of a bust in recent weeks. Fears of a recession amid rising inflation, coupled with concerns over a further hike in interest rates, have left markets battered.
From the cryptocurrency world where massive sell-offs in the face of the collapse of notable crypto projects have depleted its market cap to levels last seen two years ago, to the global stock markets where the tech-heavy Nasdaq Composite Index has particularly plummeted; it’s kind of a bloodbath out there.
And there have been real casualties: Thousands of people have suddenly become unemployed as companies adopt cost-cutting measures, especially in the form of job cuts and hiring freezes, to boost their chances of navigating an imminent lean period triggered by investors pulling back. Indeed, nearly 40,000 tech workers have been laid off between January and June this year across 200+ layoff events across the globe.
The current downturn jeopardises job prospects in the tech industry, and the impact could be most telling in emerging ecosystems like those on the African continent where tech opportunities have been recommended as key to solving dire unemployment challenges. South Africa and Nigeria each have unemployment rates of over 30 percent, for instance.
Nigeria’s technology sector, which attracted the most venture capital investments in Africa last year, was projected to create three million jobs in 2021 – a year when the world was still adapting to the ‘new normal’ influenced by the Covid-19 pandemic. The International Finance Corporation (IFC) also says increasing internet penetration in Africa from 43.1 percent to 75 percent could create 44 million jobs.
However, the ongoing reversals in the global tech industry have thrown up some new questions as to the fate of the projected job opportunities in the industry in the midst of headwinds and how the unfolding downturn could impact the hitherto largely-flourishing labour market for tech roles.
Hilda Kragha, an executive with more than a decade worth of experience in consulting and human capital development – and CEO of The African Talent Company (formerly ROAM Jobs); a prominent jobs brand in four African countries boasting over 4 million talents under the Jobberman and BrighterMonday umbrellas – suggests the recent bearish shifts in tech could shake up the structure of the jobs market and impact Africa’s teeming labour force in more ways than one in this interesting interview with WeeTracker.
CEO, The African Talent Company
WT: How instrumental has tech been in providing employment opportunities in Africa so far and what do you make of the potential?
Kragha: In the past decade, tech has had an oversized impact on employment opportunities across Africa, but not in the way you think. Yes, with the fast growth of the tech industry we have seen a larger number of young people employed in this space, but tech is not yet one of the top 5 or even 10 employers of young talent in the grand scheme of things.
Traditional industries still rule the day (education, healthcare and agriculture) and even across industries (including tech), the most typically hired roles remain the fundamentals such as sales, marketing, HR, finance and administration. The real impact of tech has been, in my opinion, rapid change in access to learning and the rise of self-taught youth who have gone on to capture opportunities both at home and abroad.
The rise of YouTube and other platforms where young people can develop all kinds of skills and become ‘solopreneurs’ and gig workers on platforms such as Upwork and Fiverr which then enable them to earn a decent living. The potential here is great and I think we will continue to see this gig space grow as it becomes more and more expensive to have full-time staff on board.
WT: With tech currently in the midst of a downturn globally as hiring freezes and job cuts become the order of the day, what sort of impact is on the cards for African tech job opportunities given that the local ecosystem is prominently supported by funding from the West?
Kragha: Naturally the slowdown will trickle down here too, but not immediately. We have not yet seen the kind of massive layoffs that are happening in the west but that is, in part, due to the fact that Africa typically trends a few months behind global phenomenon. In three to six months’ time as tech companies on the continent who are currently raising fail to secure their rounds or close smaller rounds, and others begin to run out of funds, we will begin to see the impact.
On our platforms, we saw a ramp-up of hiring by tech firms in 2021, in fact, most of them hired in-house recruiters to fast-track their scale-up. This is not happening anymore. Given the prevailing economic climate though, most of them may not be able to sustain this staff strength. A large percentage of tech firms have less than 12 months of funding at any given time and as they are forced to slow down their burn rate, personnel costs will definitely need to come down.
As a result, we will see smaller full-time staff and more part-time/contractors and outsourced staff. There will also be other creative ways to bring down costs, e.g., lower salaries for staff who work from home. Global tech giants like Facebook and Amazon have already done this and it is one of the most obvious tools available to employers given how popular work-from-home initiatives are
WT: It is likely that some skills will be more in demand than others in these times. What do reckon are the skills likely to be sought after in African tech regardless of the downturn and how can we optimise for that?
Kragha: Hard to tell, I think there will be opportunities for all skills, but at a smaller scale. e.g., companies may have one Product Manager instead of two, or outsource their entire customer service team instead of having it in-house. As in most sectors, the more specialised your skillset the more insulated you are. A junior developer may be laid off before a senior one, for example.
WT: Talent shortage is a problem that has persisted in the ecosystem with talks of a lack of optimal capacity in the available pool. What can be done to address this?
Kragha: I actually believe that this downturn is a good time to address this. With free flowing funds, companies typically poach talent instead of developing in-house talent pools that rise through the ranks and grow the ecosystem overall. With cash off the table, the idea of nurturing in-house talent which is definitely more affordable has suddenly become more attractive.
Long term, there needs to be a concerted government/policy-led effort to develop tech talent. Initiatives such as the Kenya government mandating coding in primary schools is a good start, however we need to be careful not to focus only on the low-value portions of the tech value-chain and also nourish business-related tech talent which is what will give birth to and run thousands of local companies hiring even more young people
WT: Some of the trends that were fast-tracked by the pandemic appear to be reversing with tech companies increasingly walking back remote work, for example. How is this playing out for the future of work bearing in mind the needs of the employer and employee, as well as the state of the industry?
Kragha: Personally, I am a fan of hybrid but not of remote. In Africa, specifically, the infrastructure challenges create huge barriers for remote work. In Nigeria, for example, one would need to buy most of their staff a generator or inverter, provide diesel and maybe even data. This is extremely expensive. It makes a lot more economic sense to have people under one roof.
Work ethic is also a big issue. Most of the complaints around remote work have centred around non-responsive staff, a spike in moonlighting, and other practices that employers do not like to see in their force.
At the same time, I understand that it is tough to be in the office everyday and that work-life balance is way more important to staff now than it was pre-pandemic. I believe that hybrid provides a good middle ground for this conversation, with people on-site two or three times a week.
A situation report
In a way, the world is witnessing a reversal of some of the gains brought about by trends that caught on at the height of the Covid-19 pandemic. Lockdown measures adopted across the globe catalysed a sustained spike in technology penetration across various aspects of human life – including lifestyle, work, and finance.
Hence, tech companies – from big listed firms to small startups – enjoyed a boom. But it appears things have changed and earnings have taken a hit, dampening the bullish optimism that was seen across the board in tech previously.
It wasn’t that long ago that publicly-listed tech companies were seeing their market cap and share prices soar to record highs as they reported impressive numbers fuelled by the pandemic. The same boom was also observed in the private markets as tech investors doubled down on the prospect of tapping unicorns and the next big things in tech. Startup funding soared and private valuations ballooned, even in frontier markets.
African startups raised over USD 4 B for the first time in 2021 and five of the seven tech unicorns in the nascent ecosystem were also recorded last year, amid a rise in mega raises. However, with a market downturn hitting tech globally, funding cutbacks and valuation slashes are looming, potentially leading to a cash crunch.
Although the optics in the public domain suggest African tech is still relatively unaffected by the global trend barring the recent reports of Swvl’s belt-tightening, whispers of silent layoffs and salary cuts at yet-unconfirmed local startups, as well as talks of investors pulling out of deals or taking a harder look, are making the rounds in some circles.
It follows that there might be a possible readjustment on the cards and tech job opportunities are likely to see their fair share, at least in the short term.
Feature Image Credits: Pixabay
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