As 2024 gains momentum, we rewind to the unpredictable ride that was 2023, a year that was marked by the Tech Winter and the AI boom. In this blog we uncover key takeaways and crucial insights that pave the way for tech hiring trends ahead. From navigating recruitment hurdles and tackling AI’s diversity gap, we’ll unravel the pivotal industry shifts, gleaning insights and recommendations for the year ahead.
What we saw in 2023
Tech Winter Fallout
The UK tech sector, usually renowned as a beacon of growth and innovation, faced a Tech Winter in 2023. Whilst the UK demonstrated resilience by the end of 2022 retaining our top spot in Europe and third place globally, the industry is not immune to the wider economic downturn. Widespread hiring freezes and mass redundancies took place across the sector last year, during which, many organisations grappled with uncertainty, leading to a temporary halt in recruitment efforts or mass redundancies. Yet, the key question lies in unravelling the true and lasting impact of the Tech Winter. What will be its enduring consequences?
Lack of investment in innovation
Investors became nervous as a result of the Tech Winter, Russia-Ukraine War, inflation and other macroeconomic challenges. In the first half of 2023, venture capital funding deals had reduced significantly, with venture capital funding for UK startups plummeting by 43.1% year-on-year. The climate felt especially chilly for tech startups, as we saw the likes of Tech Nation, the UK Industry body created to champion the tech sector, forced to close after losing Government funding. This reduction of investment in tech startups could result in the slowdown of innovation, job creation and talent.
Losing sight of DE&I goals
This unprecedented period of uncertainty also cast a shadow on Diversity, Equity and Inclusion (DE&I) efforts with resource constraints taking centre stage. Budget cuts and layoffs disproportionately impact underrepresented groups, weakening the diversity pipeline significantly and wiping out years of DE&I efforts based on a decision making process which traditionally focuses on length of service and seniority.
Adding to the challenge, DE&I roles had a difficult time during job cuts at the end of 2022 and into 2023, as highlighted by Bloomberg’s report, “layoffs sweeping the technology industry are gutting diversity and inclusion departments, threatening company pledges to boost underrepresented groups in their ranks and leadership.”
The growth of AI
The number of UK AI companies has increased by 688% over the last 10 years bringing unprecedented innovation to our everyday lives. The reaction and impact has been astounding, not to mention the appeal to investors. By Q3 of 2023, the average value of AI deals stood at $29.2 million, reflecting a remarkable 48% increase compared to the entire year of 2022. However, this rapid ramping up of a new technology presents groundbreaking advancements but also unveils a stark reality: a lack of diversity in AI model implementation.
The Impact of Built-in Bias
A recent research paper from the New York University Research Centre characterises AI as a diversity disaster, pointing to “flawed systems that perpetuate gender and racial biases.” The report highlights imbalances, such as over 80% of AI professors being men and a low representation of black employees in major tech companies—2.5% at Google, 4% at Facebook and Microsoft. Even more shocking, there’s a notable lack of data on trans workers and other gender minorities in the AI field, raising major concerns about inclusivity and representation.
Statistics reveal a blatant gap in AI, emphasising the urgency to prioritise diversity and inclusivity within its design and build. Imagine an AI-powered world fueled by biases baked into its algorithms. Studies from MIT find these biases can amplify existing societal inequalities by up to 30%, perpetuating discrimination in everything from facial recognition to loan approvals. Ignoring DE&I in AI development isn’t just an ethical oversight; it’s a recipe for entrenching social injustices and exacerbating inequality.
The Office Comeback: Women at the Crossroads
2023 saw a move back to traditional office spaces with many companies mandating a semi, and on occasion, permanent requirement to work from the office. Anger was often the reaction from staff, particularly when working from home had previously been promised. Concerns arose about its impact, particularly on women as data indicates that women, often shouldering childcare responsibilities, may face challenges or less opportunity due to reduced flexibility.
“I fear a lot of companies will now start to do this because of the need for control back, a lack of trust and lack of awareness from their own leadership development. But who will it impact? The carers and parents. I fear an impact on diversity in the workplace.”
Beckie Taylor, CEO of Tech Returners and Reframe WIT
Beyond gender inequality, where employees work actually has huge implications for DEI progress and could adversely affect marginalised employees. Just one example is shared by Cameron Mason, TA at DoctoLib around how individuals facing disabilities may encounter new barriers in an office. The adjustments that are so naturally incorporated at home, risk being ignored or forgotten in an office setting.
Learnings and recommendations for 2024
Prioritising diversity and sustainability over hypergrowth
The Tech Winter exposed the problems created by unsustainable growth models with many startups and businesses overvalued and overfunded. To reduce the likeliness of a sequel, businesses should focus on building strong foundations, stability, and long-term value.
But when focusing on stable and steady growth, with such severe cuts and changes to the workforce, 2024 is the year where companies should prioritise talent development and retention. Most importantly, it’s a time to refocus DE&I initiatives to attract diverse talent and foster a workplace culture that thrives on innovation and added value. The Tech Winter left its mark on DE&I efforts. Reductions in workforce disproportionately impacted women and underrepresented groups, while DE&I initiatives often faced funding cuts.
A strategic and ethical approach to hiring not only safeguards against the pitfalls of unsustainable growth but also positions companies to cultivate a resilient workforce that embodies diversity of thought, promoting reduced bias and inclusive technology practices. But how do we restart these efforts after such a turbulent period?
Data-Driven DE&I
To understand the impact of the redundancies and restructures on DE&I strategies we must look at our data. Blindly forging ahead without acknowledging the impact of the last 18 months is like sailing without a map. We must know where we are now, first. That way, we can identify where representation has weakened and pinpoint areas requiring attention. Ignoring any uncomfortable truths will only hinder progress. Remember, it is a journey not a race.
The pandemic’s shadow skewed data on the gender pay gap due to mandatory reporting being recalled during Covid and furlough schemes impacting statistics with many businesses not resuming their reporting as we returned to a restriction-less world. This left us without a crucial indicator of progress. But we must expand our focus beyond this single lens, tracking and addressing inequities across race and ethnicity, neurodiversity, disability, and other dimensions. Is it that only through cold, hard statistics that we can ensure we’re not reinforcing the very inequalities we aim to dismantle?
Partner with AI, don’t fear it
Fearing AI overlooks a far more empowering reality: collaboration. Instead of viewing AI as a threat, consider it a powerful extension of ourselves, a tool to amplify our human capabilities. History showcases this potential; the printing press didn’t replace writers, it revolutionised communication. Similarly, AI won’t eliminate everyone’s jobs, it will transform them.
As tech professionals and business leaders, fostering this relationship with AI starts with active engagement. Dive into understanding its capabilities, limitations, and biases. Treat AI as a collaborator, not a competitor. Set clear goals and expectations, providing it with quality data and feedback to guide its development. Just as you wouldn’t ask a team member to complete a task blindly, don’t delegate key decisions solely to AI. Maintain oversight and responsibility, ensuring responsible applications.
Further solidifying this partnership involves investing in upskilling and reskilling. Invest in and equip yourself and your workforce with the skills necessary to work alongside AI – not just coding, but critical thinking, communication, and the ability to interpret and explain AI outputs.
Finally, remember that building a truly powerful and inclusive AI-driven future requires incorporating DE&I principles into every stage. As AI’s influence grows, the stakes of achieving inclusivity in tech skyrocket. Biassed algorithms can amplify existing disparities within the very tools we develop causing not only inequality but potentially even harm. Ensure your AI development team reflects the diversity of the communities it aims to serve and remember that the data AI algorithms learn from shape what it spits out. We can avoid reinforcing existing biases by actively seeking and utilising diverse data sets that reflect the real world. Don’t treat AI development as a closed box. Regularly engage with diverse stakeholders throughout the process. Allow feedback and concerns to be addressed to ensure that AI solutions align with societal values and needs.
Rethinking ‘Fire and Rehire’
During 2022 and 2023 businesses resorted to knee-jerk redundancies or cuts – a painful necessity at the time, but something we can now see as a short-sighted solution. Before wielding the metaphorical axe too quickly going forward, consider this: A study by Challenger, Gray & Christmas found that companies who laid off employees during an economic downturn subsequently rehired 60% of them within two years. This costly revolving door highlights the need for strategic and measured approaches to workforce adjustments.
Instead, we recommend thinking beyond immediate budget cuts and focus on retraining and upskilling existing talent to adapt to evolving needs. It’s well known that upskilling and investing in development of employees improves engagement and retention, reducing the need for intense future recruitment or churn.
2024: Stability, Inclusivity and Collaboration
2023’s Tech Winter served lessons: prioritise stability, nurture diverse talent, and partner responsibly with AI focusing on diversity. Let’s leave short-sighted decisions behind in 2024. Develop in your current people, invest in the right new people, embrace collaboration, and build a tech future where everyone thrives. The choice is ours.
At Tech Returners, we’ve been digesting the experiences of 2023 and as a result, TR4: The 4-Week Returner Launchpad emerges as our newest hiring solution offering a streamlined, responsible approach to reintegrate experienced, diverse tech talent into progressive businesses. TR4 recognises the importance of supporting and developing a diverse workforce by offering bespoke training and accommodating returners, contributing to a more inclusive and flexible work environment.
If your business would like to learn more about TR4 by downloading our Information Pack or registering for our Webinar on February 1st.
