The word is out, and the numbers back it up: Silicon Valley’s tech sector is finding its footing again after undergoing a reset over the past 18 months. For the first time since the start of last year, the number of tech layoffs in the Bay Area last quarter was less than in the previous three months, according to California Employment Development Department data. Better yet, the net change in the region’s tech headcount was positive 800 jobs from April through June after being negative 14,900 in the first quarter of 2023, suggesting that the industry has “turned the corner,” Russell Hancock, president of think tank Joint Venture Silicon Valley, told The Mercury News.
Although companies’ expansion plans continue to be challenged by high interest rates and inflation, many large employers have lately taken a “much more positive macro view of the economy,” Jeff Bellisario of the Bay Area Council Economic Institute told the Mercury News. Rising tech stocks, falling inflation, and the S&P 500 experiencing five straight months of gains all offer reasons for optimism, as does a CBRE report published last month that says the Bay Area continues to have the nation’s single largest tech talent labor pool and the highest number of tech roles of any U.S. market.
The region’s tech sector mainly used the first half of this year to reset after overhiring became prevalent during the height of the pandemic. Some in the industry are also in the midst of pivoting to artificial intelligence and machine learning. Others are making their first forays into developing green energy vehicles and batteries. In all of those cases, many tech companies continue to hold on to their engineering talent, CBRE’s Chris Shepherd, a member of the real estate brokerage’s tech and media practice, is quoted as saying in the Mercury News. Most of the layoffs that have impacted the Bay Area’s tech sector since the start of last year have affected non-tech roles such as marketing, finance, and recruiting, Shepherd said, according to the Mercury News.
Signs of stabilization in the local tech scene reflect an improving situation nationwide, the newspaper reported. Tech job cuts across the board were down 79.5 percent from a year ago in June, with layoff announcements in just the western United States down 69.5 percent, Bank of the West’s Scott Anderson told the Mercury News, citing data compiled by consulting firm Challenger, Gray & Christmas.
As the rate of layoffs slows, the idea of tech job growth resuming during the next 12 months is much more plausible now than at the start of 2023. OpenAI’s launch of the ChatGPT chatbot at the end of last year sparked a frenzy among investors, businesses, and the public for all things artificial intelligence, as the Silicon Valley Business Journal put it. San Jose and San Francisco have four times more AI companies, job postings, and job profiles than the next 13 U.S. metro areas, according to a recent report by the Brookings Institution think tank. If the inflation rate remains on a downward trend and the Fed begins loosening its restrictive monetary policy, it’s almost certain that the Bay Area’s largest tech companies, many of whom recently reported strong quarterly earnings, will ramp up hiring efforts in an effort to grab more market share in the artificial intelligence and machine learning landscapes, propelling the rest of the industry into its latest “boom” cycle.
As Joint Venture’s Hancock put it to the Mercury News, “We’re poised for our next phase of innovation and reinvention. People who have lived in Silicon Valley long enough have seen this movie before. Stay here awhile and you’ll see it all over again.”
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