Recession Watch: A white-collar downturn?

There’s no question what everyone’s thinking about these days. In this weekly update, we gather and analyze recession-related news so that you don’t have to. Are we at rock bottom yet? Who’s winning or losing? How are companies reacting, and how should you react? Read on to find out.

A “white-collar recession”. That’s what The Economist called the recent wave of retrenchments that appeared to have exclusively hit the tech sector.

In Southeast Asia and India, the layoffs have been relentless. Carousell and Ula got hit last week. And just yesterday, Oyo said goodbye to 600 folks.

Image credit: Timmy Loen

“I was too optimistic about the pace of our impact versus our increase in investments,” Carousell CEO Quek Siu Rui explained in his letter announcing the layoffs.

In the crypto world, winter has stayed brutal, with Dubai-based exchange Bybit letting go of another 30% of its staff following a round of layoffs in June.

The weakness in the tech sector is showing in the financial results. Even SaaS giant Salesforce is seeing its slowest year-on-year growth since it went public in 2004.

Only in tech?

Outside the tech bubble, life appears to go on normally – if you ignore the sky-high inflation.

Yes, Wall Street banks are cutting bonuses and jobs.

But as I’ve mentioned in a previous edition of Recession Watch, work remains plentiful in some sectors – though some of them are seeing a boom now because they slowed down during the Covid-19 pandemic.

In fact, US worker wages rose 5.1% in November compared to a year earlier.

SaaS back in vogue

What does this all mean?

The combination of the talent glut caused by the layoffs and the shortage in industries that are still hiring may cause some monumental shifts. It might be too early for tech workers to shed their Patagonia vests after all.

For example, we may see companies from non-tech industries embrace automation to make up for the talent shortfall. VCs may place more bets on such startups.