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The hiring spree comes even as funding for startups dries up in the face of decade-high inflation, a stronger dollar and massive rate hikes that have prompted Big Tech to pull back on their spending spree.
Late-stage U.S. startups are snapping up talent freed up by layoffs and hiring freezes at Big Tech, adding experienced engineers and project managers to their rosters despite signs of an economic slowdown.
Companies with steady cash flow from viable products on the market offer rich packages to attract talent who would otherwise prefer to work at big tech firms including Microsoft Corp. and Meta Platforms Inc.
Stack Overflow CEO Prashanth Chandrasekar said the coding platform’s workforce has more than doubled to 540 this year, with some of the new hires coming from firms such as Google and Apple Inc.
“When competitors downsize, other talented people who are employed there may consider looking elsewhere because they may not see their company as stable,” Chandrasekar said.
Deepak Rao, CEO of X1 Card, said the credit card startup’s headcount has more than doubled to 35 in a year and will be joined by more employees from larger companies in the coming months.
Google, Apple, Microsoft and Meta and did not immediately respond to requests for comment.
The hiring spree comes even as funding for startups dries up in the face of decade-high inflation, a stronger dollar and massive rate hikes that have prompted Big Tech to pull back on their spending spree.
Venture capital funding raised by US startups fell by nearly a third to $146.3 billion in the first eight months of 2022, according to GlobalData.
“Tech startups dependent on ongoing venture capital funding have limited hiring, but companies in later stages of funding with viable products in the market are doing much better,” said Patrick McAdams, CEO of recruiting firm Andiamo.
“These companies have continued to make strategic hires and are now able to take advantage of the softening technology hiring market to secure key hires that were nearly impossible this time last year (when the pandemic increased demand for tech workers).
A survey of 581 executives, almost entirely from US tech startups, found that more than 40% of them have increased their hiring plans in the first half of 2022, according to recruiting firm A.Team and startup consultant MassChallenge.
Companies are also shortening hiring times and offering higher pay packages to lock in candidates as they compete for talent in a tight job market, recruiters said.
The greater say in decision-making provided by startups has also appealed to executives such as Mansoor Basha, who joined Stagwell, a $2.2 billion marketing firm, as chief technology officer in September from Accenture.
“The opportunity to make key decisions internally was important to me,” he said.
But some analysts warn there’s only so long before startups can keep up their hiring pace in a weak economic environment.
“If the economy does go into recession, that will only add to the pressure that tech companies are facing as demand dries up,” says Dante DeAntonio, director of economic research at Moody’s Analytics.
