CEOs Stepping Down, Job Cuts Up: Is Tech in Trouble?
There are some potentially distressing numbers out there.
Across the technology industry, CEOs are stepping down, according to new data from staffing firm Challenger, Gray & Christmas. Is that a warning sign of some sort?
Between January and October, some 181 CEOs of tech companies have left their positions, a year-over-year increase of 46 percent. “The tech sector is undergoing major changes due to an evolving landscape. New technologies are changing the way people work and often make workplaces more efficient,” read the firm’s report (PDF) accompanying the data. “In addition to potential staffing changes, there may be differences within the leadership and board ranks regarding exactly which path a company will take. In fact, we have tracked the highest number of chief executive officer changes in the tech sector on record this year.”
The report added: “The next-highest year for tech CEO turnover occurred in 2006, when 163 CEOs left technology companies.”
Even as these dozens of CEOs head for the exits, the number of job cuts within the technology sector is picking up year-over-year. Here’s the firm’s breakdown of job cuts in select industries, 2018 vs. 2019:
For those keeping score at home, announced job cuts in the technology sector are up 380 percent over last year. Across all industries, the biggest job cuts are taking place in California, New York, Massachusetts, Texas, and Illinois — collective home to many substantial tech hubs, including Silicon Valley and Cambridge. The vast majority of cuts were due either to restructuring or companies shutting down.
Is it time to panic? Probably not. For one thing, the technology industry has announced plans to hire roughly 21,115 workers, according to Challenger, Gray & Christmas’s calculations. That’s in addition to the piecemeal, quiet hiring that takes place at companies throughout the year.
And consider this: According to the U.S. Bureau of Labor Statistics (BLS), the national unemployment rate in October (the last month for which finalized data is available) stood at 3.6 percent, which is pretty low in a historical context. For those in the information industry (which includes data processing, hosting, and related services), BLS estimated the unemployment rate at 3.3 percent in October 2019, up a smidge from 3.2 percent in October 2018. For those in professional and business services (which includes other tech-related jobs, including computer systems design, technical consulting, specialized design, and more), the unemployment rate stood at 3.5 percent in October 2019, down from 4.0 percent in October 2018. That’s likewise pretty solid.
As Challenger, Gray & Christmas stated, it’s very possible to attribute the accelerated rate of job cuts in tech to several factors, including many companies deciding to shift their strategies to incorporate new technology. As businesses move to the cloud and automate processes, for example, the need for certain jobs decreases. A firm might no longer require the datacenter administrators and sysadmins who ran its on-premises server farm, for example, but they need more data scientists to wrangle the immense amounts of data they’re receiving from their new cloud-based tools.
If you keep your skills current — and stay aware of which skills are most in-demand — it’s very possible to stay ahead of this technological change.
But why are all the CEOs leaving? That’s hard to say, but your typical CEO deals with factors that never confront your typical employee. If the company’s stock price doesn’t stay above a certain line, for example, or if there’s a fight for control among board members, they could find themselves out on the street again.