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The numbers track

Nearly 5% of job-switchers doubled their salary in late 2022—twice as many as those in early 2022. Even amid signs of an economic slowdown, these numbers reveal how US employers remain hungry for tech talent as the tech sector hired heavily during recovery from the lockdown.

Since then, over 40% of tech employees improved their schedule flexibility, and more than one-quarter gained health benefits. Additionally, more than 27% of new tech employees got a signing bonus in the fourth quarter, up from 22% at the start of last year.

According to the US Department of Labor, employers added more than 223,000 jobs in December 2022. New and open positions, while declining at the end of the year, remain elevated.

A great climate for well-paying tech jobs

As reported by Aki Ito, Senior Correspondent at Tech Insider, Revelio Labs recently performed analysis of tech workers laid off in 2023. Ito states, “72 percent found new jobs within three months. A little over half of them have landed roles that actually pay more than what they were earning in the jobs they lost.”

Laid-off workers are more likely to find a new job quickly now than at the height of the tech hiring frenzy back in July of 2021. However, according to Revelio, prospects with hard technical skills (like coding) fare better than those with more general competencies (like communications or HR).

Where does tech stand?

Tech Insider notes that some tech companies may be contracting after over-hiring to meet surging pandemic demand. However, as technology is increasingly a critical asset to more businesses, companies in traditional industries are hungrier for tech skills now more than ever. “The job market is still hot. Although some parts of the tech industry are struggling, other companies are actively hiring,” commented Reyhan Ayas, a Senior Economist at Revelio Labs.

That’s good news for tech employees worried about immediate (and future) career opportunities. A few tech industry analysts have even suggested that “big tech’s” losses could even be smaller companies’ gains.

In conclusion, changing jobs can be a daunting task, but the market data suggests that it could be a smart move for tech professionals looking for career advancement and higher salaries in 2023. The numbers don’t lie—it’s worth considering new opportunities and taking that next step towards a brighter future. And if you need help with your job search, UpRecruit is here to be your partner and guide.

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What is a hiring freeze?

When a company decides to stop all recruitment and hiring activities, a hiring freeze occurs. This is usually a response to adverse economic conditions or an internal crisis. This may be temporary or long-term in extreme cases. The perception is that a freeze offers short-term savings that can help a company stay financially sound and avoid furloughing or laying off existing employees.

While hiring freezes are often seen as a viable solution for money-saving, the real impact often indicates otherwise.

According to Silicon Valley HR thought-leader Dr John Sullivan; “Hiring freezes are common during downturns. However, they are often an economic mistake that hurts revenue generation and product development. Their ‘unintended consequences’ are seldom identified, tracked, or quantified in dollars by talent leadership.”

Vacancy has a cost

The cost of vacancy is a figure that expresses the financial impact of unfilled positions. According to Executive Coach and Master Team Builder, Brian Formato of Grove Management: “The two words that I have found most damaging to a company’s long-term viability are ‘Hiring Freeze.’ Implementing a hiring freeze is a knee-jerk reaction.” Brian continues, “In most organizations, labor costs are one of the highest cost centers. Implementing a hiring freeze is a quick and easy way to reduce costs, but recruiters are left finding other tasks within an organization to carry out and efforts to create talent pipelines are put on hold. Organizations should never, under any circumstances, implement hiring freezes.”

It’s typically harder to hire the right talent for tech jobs which take an astonishing 62-day industry average to fill (according to Hired). Calculating the cost of vacancy helps recruiters measure budgets and mitigate damage and loss of productivity.

Calculating the cost of vacancy

We’ll preface by reminding you this calculation is a general guideline for determining vacancy cost—every company is different. In its simplest form, you can calculate cost of vacancy like this:

Lost revenue & gross profit

Working backwards, we can calculate revenue lost. The average employee revenue is annual revenue divided by the number of employees. Then multiply this average revenue by the average number of working days in one year (260). This yields an employee’s daily revenue.

To estimate the revenue specific to a position, use a predetermined multiplier to help quantify the impact of the role. To determine the level of impact for the role, multiply that number by the employee’s daily revenue. This reveals the daily revenue specific to the position, which you’ll then multiply by the estimated time-to-fill (62 days).

Voila, you’ve just calculated the revenue lost to a vacant tech role!

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The impact of vacant positions

It’s difficult to tie a specific vacancy cost to a standard formula as each company is unique. But identifying the cost of unfilled positions regularly generating revenue is a bit easier due to the unmet quota of the empty role. This falls under hard costs and includes overtime pay, contractor fees, and turnover expenses. For non-revenue generating tech roles, it’s tougher to quantify the loss in morale, productivity, and project goals as these are the soft costs of vacancies.

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A hiring freeze may give your organization short-term financial respite, but before you consider imposing a freeze, we recommend looking at alternative measures like leveraging interim (contract) workers, work redistribution, and reassessing schedules and timetables. Look for opportunities to shave costs instead of personnel.

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