Hardly anyone expected the events from the past few months. To begin with, we had to figure out ways to cope with the war in Ukraine, the downturn of the economy on a global scale and tech layoffs, including the challenges faced by a variety of the crypto segment.
Companies that were able to quickly pivot and adapt to the ever-changing conditions, however, have been able not only to survive but to thrive. As a custom software development company, Dreamix was able to realize exponential growth both in terms of the number of projects and employees over 2021 and 2022.
Nonetheless, the changes we are now witnessing are not completely unexpected and not nearly as unpredictable as they might have been a few years ago.
Since the start of the COVID-19 pandemic, we’ve been observing a shift in trends and tides across the IT sector. It all started with the initial stagnation, hiring freezes and the desire to minimize costs. Gradually, as companies adopted fully remote or hybrid models of work, we all had time to adapt. For example, funds for fitness and wellness programs in the office were no longer relevant. Delivery of fresh fruit and healthy snacks replaced food deliveries and home office equipment.
After a period of relatively quiet and uncertain “waiting”, hiring resumed at a much faster pace than ever before. We saw a surge in job ads across the globe and location was no longer a factor. Meaning that, for example, a US-based company could easily start hiring IT professionals in Bulgaria at a rate not much lower than the one they would be paying in California or Boston.
A matter of tech talent
Even though the wage gap across countries is very much present still to this day, it is slowly diminishing. Soon enough the only truly meaningful factor when it comes to hiring talents will be their technical skill levels. Perhaps in a perfect world or maybe not only.
On the other hand, certain companies had been enjoying unlimited budgets when it comes to hiring, retention initiatives, parties, and teambuilding events for a long time. As the financial situation seemed stable, nobody was questioning higher spending budgets used for working with recruitment agencies, advertising and job ad platforms, and various conferences and events. Acquisitions of start-up companies and mergers among big players in the market were the norm. Since 2019, things changed considerably.
Unfortunately, as the current economic situation remains unpredictable and as we are heading straight into a possible recession period, tech layoffs have been more than expected. And it’s not just the regular least productive 10% of each company, as used to be the norm in corporations.
The global tech layoffs
According to data from the global Layoffs.fyi tracker, over 47 000 employees lost their jobs. This number comes mainly from tech start-ups in the IT segment since the start of 2022. The pandemic stats show that this is the biggest peak in tech layoffs since March and April 2020. The detailed list of companies that had to cut down on staff even includes tech giants like Netflix and Coinbase.
The biggest blow in terms of tech layoffs took place in IT companies in the transportation, travel and hospitality segments. This includes the Turkish-based super successful food delivery start-up Getir. The company boasted an impressive $120 million in sales in 2019. Curiously enough, they closed a Series E funding in the amount of $768 million only in March of this year.
However, we can observe that the biggest growth in tech layoffs in 2022 in the cryptocurrency segment. The Washington Post recently reported that the US crypto exchange giant Coinbase had to let go of nearly one-fifth of its workforce in June.
The Bulgarian IT market in 2021 and 2022
The Bulgarian market also experienced hardships, with companies such as Crypto.com making a considerable decrease in their employee counts over the past few weeks. The company announced its plans to reduce staff in their Bulgarian office in mid-June and as a result, approximately 5% of the local employees are now without a job (around 260 people to date).
However, as it goes with all business-related transactions, some companies’ loss becomes other companies’ gain.
Data shows that the situation in Bulgaria has in fact improved over the past few years. According to investment stats provided by local IT platform Dev.bg, the local ecosystem has enjoyed approximately $300 million of fresh investments over the past year. Yes, indeed, this includes mergers and acquisitions of local mid-size and start-up companies, but also brand new R&D centres.
In fact, according to the observations of a local analyst, Peter Djuganski, IT-related job ads in Bulgaria were around 7000 in April of this year. In June, only three months later, they equalled 6400. The data more or less reflects the global IT business trends at the moment. However, the decline might also have to do with the current summer season. Many companies are either way experiencing a slow down in hiring over the months of June, July and August.
A market readjustment or a long-term downturn?
The answer is multifaceted, and in our experience, the best way to remain on top of market trends is to build lasting and solid relationships with partner companies across the globe and be constantly open to new opportunities.
This philosophy is so engrained into the Dreamix culture and mindset, that the average time we spend working on projects is usually between 2-3 years and our longest-running project has been with us for over 12 years.
How do we build lasting relationships with partner companies and how do we retain them? Check out our view on the topic here.
Stay tuned for more articles on the IT sector and on our mechanisms for staying on top of the game!