Who is getting laid off in Canada’s tech industry?

According to Layoffs.FYI, more than 100,000 tech workers lost their jobs across 344 firms in the first six weeks of the year.FG Trade

After a pandemic hiring frenzy, the global technology industry is in downsizing mode, with many of the world’s biggest tech firms announcing massive cuts – and Canadian tech workers aren’t immune.

According to Layoffs.FYI – an online database cataloguing the cuts globally – over 100,000 tech workers lost their jobs across 344 firms in the first six weeks of the year. By comparison, the website only tracked 160,000 layoffs in all of 2022, most of which occurred in the final two months of the year.

While these cutbacks are still ongoing, new data is shedding light on who is more likely to be first on the chopping block.

According to Layoffs.FYI founder Roger Lee, the layoffs are largely concentrated in sales, marketing and other customer-facing roles, which make up 20 per cent of all cuts. HR and recruiting are the most disproportionately affected departments. On the other end of the spectrum, engineering and IT departments are the least likely to experience downsizing.

Preliminary data also suggest that women and members of minority communities might be losing their jobs at disproportionately high rates. When Mr. Lee ran the names of 1,258 recently laid-off tech workers through a software application that sorts names based on gender it identified almost 45 per cent as “likely female.” According to a 2022 study by Deloitte, women account for less than a third of tech-industry workers, and occupy less than a quarter of technical roles.

In fact, a recent lawsuit launched by two former Twitter employees accuses the company of targeting female staff in its recent layoffs, claiming it cut 57 per cent of its female work force, and just 47 per cent of its male employees.

When Mr. Lee ran the names of 150 workers who were recently cut from Canadian-based tech companies, a similar proportion – 43 per cent – were identified as likely female.

“It is admittedly a small sample size, though it is consistent with the gender breakdown from the U.S. analysis, which had a bigger sample size,” Mr. Lee said.

By comparison, only about 36 per cent of the Canadian tech industry identifies as female, according to a recent study conducted by the Tech and People (TAP) Network, a non-profit association of more than 900 people and culture leaders across 250 Canadian tech companies.

Even if the cuts were proportionate to employee gender populations, however, TAP Network chief executive Stephanie Hollingshead says they would still take a greater toll on female and minority workers.

“When they’re out there looking for a job again, they face more barriers and biases,” she said. “It’s harder for them to get work.”

Despite the significant cuts taking place south of the border, however, Ms. Hollingshead said the Canadian tech industry has demonstrated more resilience, in large part because of its unique makeup. Much of the industry’s layoffs are concentrated at some of its largest employers. While those cuts often extend to their Canadian operations, the country’s tech sector has a much higher proportion of smaller players overall.

For example, last month Amazon announced that it was cutting 18,000 staff across Canada, the United States and Costa Rica, and Google parent company Alphabet’s 12,000 worldwide layoffs include an artificial-intelligence research office in Edmonton.

While it may sound like bad news for Canada’s tech sector, cuts at some of the industry’s biggest firms may make it easier for the country to compete for talent. According to a TAP Network study conducted last May, 23 per cent of those who voluntarily resigned from roles at Canadian tech firms during the Great Resignation period did so in favour of a remote job for a non-local tech company.

Rather than reducing the number of Canadians employed in the tech sector, Ms. Hollingshead said the layoffs have had a more noticeable impact on employee turnover, causing many employees to think twice about job hopping.

“Employees are sitting tight and trying to keep a low profile, they’re less willing to take a risk of joining a new company right now, and those that are out there looking aren’t looking for quite as high of a salary,” she said. “But that’s compared to a pace that was utterly frenetic, and these smaller tech companies were really struggling to hire people; they just couldn’t compete with these large companies that were offering significantly more money.”

According to TAP data, the pandemic hiring frenzy lured some of Canada’s tech talent to major global firms, and dramatically increased salary expectations industry wide. Now, Ms. Hollingshead warns, those that switched jobs in pursuit of a more competitive salary – and thus have less tenure – might be more exposed to layoffs, in what is often referred to as the “last in, first out” principal.

“It’s less expensive to let someone go who has less tenure from a severance perspective in Canada,” she said. “One company admitted to me that they were looking at those really highly paid people that had come in at these outrageous salaries more recently when they were looking at layoffs.”

The “last in, first out” principle and other neutral measures are also often used in dismissal decisions to take bias out of the equation, but a 2014 study found that basing layoffs on such factors also disproportionately affects female and minority employees.

The study found that when dismissals are based on department or position, it results in a 9-per-cent to 22-per-cent reduction in the total share of female and minority staff and the recent layoffs in the tech industry demonstrate why. According to Mr. Lee’s data, many of the recent dismissals targeted the most diverse departments, namely sales and human resources, while protecting the least, namely engineering and IT.

Those that base decisions on the “last in, first out” principle, meanwhile, lost 19 per cent of their share of female managers, according to the study, which the author attributes to the fact the female and minority staff are more likely to have shorter tenures. According to a 2022 study conducted by AntiaB.org, female employees occupy about 39 per cent of intern and 34 per cent of entry level positions, but only 23 per cent of senior and executive-level roles.

That is why Ms. Hollingshead encourages those organizations that ultimately need to make cuts to take diversity, equity and inclusion into consideration. She explains that progress in creating a more diverse technology industry in Canada has been slow and steady, and she fears these cuts will move the needle in the wrong direction.

“It’s also not just the layoffs, but we’re seeing cost-cutting in other areas, and a lot of that hits the HR budget where you’re looking at training and development, diversity equity and inclusion initiatives, mentoring programs for people from marginalized groups,” she said.

Ms. Hollingshead emphasizes the importance of having a diverse technology industry, not only because of the economic opportunities it offers tech workers, but because of the competitive advantage it provides the country.

“There are studies that show the positive impact a diverse employee base has on innovation and customer understanding, demonstrating better business outcomes,” she said. “A more diverse work force is proven to create better innovation, which supports communities across Canada in all sorts of ways.”