Will the slowdown on tech hires be a boon to adland amidst talent shortage?

The shimmer around the tech industry seems to be slowly losing its shine with the news around recession, hiring freezes, and of course layoffs dominating both global and local news headlines.  

Recently, Facebook’s parent firm Meta, made the unexpected announcement that it was cutting back on hiring with macroeconomic headwinds causing the company to downgrade its outlook. In a Q&A with employees, chief executive Mark Zuckerberg said Meta was reducing plans to hire engineers by at least 30% due to market downturn and the upcoming recession. Similarly, Spotify CEO Daniel Ek also told employees that it was slowing its hiring by 25% due to the increasing uncertainty regarding the global economy. Tesla, Microsoft, Nvidia, Snap, Coinbase have all also made announcements in a similar fashion attributing the choice to the rising inflation, declining stock market, war in Ukraine and remnants of COVID-19’s a toll on the economy.

Closer to home, the market wasn’t spared either. One shocking announcement that sent ripples in the industry was when Shopee made the announcement to cut staff in several markets – both in Asia and its global markets. The announcement came shortly after the company made headlines for expanding its operations. Amidst the news of the cuts, Shopee CEO Chris Feng told the media that the changes were made to "optimise [the company's] operations in certain segments and markets". Due to the elevated uncertainty in the broader economy, Feng said the company believes it is "prudent to make certain difficult but important adjustments" to boost its operational efficiency and focus its resources, media reports said.

The Wall Street Journal also reported that China’s tech giants such as Tencent and ByteDance are also implementing fresh cuts set to impact thousand of employees in the latest round of cost cutting.

Commenting on the matter, Linda Teo, country manager of ManpowerGroup Singapore, said that tech companies which were expanding rapidly yet faced struggles in being profitable, are now inclined to consider the freezing of headcount and cutting staff to manage their business performance. Specifically, on the start-up front, Teo added that fears of a recession approaching are also affecting the amount of funding that tech startup companies can now secure. “To cut down on costs, tech start-up companies are recalibrating their cost base including hiring and pay packages,” she shared.

Does ad land stand to benefit?

At the peak of the tech firm hiring wave, it wasn’t uncommon to see top notch talents from ad land swim over to the tech shore. Over the years, the ad land has lost many of its best and brightest to the tech giants. Ad land talent's adaptability to new market trends, the versatility of experience and people skills have often made them attractive candidates for the booming tech field. But now, with the hitting of the hiring brakes in the tech industry, and ad land amidst incredible talent pressures, one has to wonder if the tech talent will seek greener pastures within the ad industry?

Industry professionals MARKETING-INTERACTIVE spoke to, however, said that despite the slowdown, it is unlikely that the talent who have left adland will make a U-turn back.

Jimmy Yar, founder of The Talent Detective, a recruitment specialist in the advertising industry said, “Personally, I don’t think we will see much talent flow back into ad land due to the cuts and hiring freeze in tech companies. Most of the talent that switched over from ad land to tech companies did so because they felt their time in adland was up.”

Moreover, moving back to adland would require a move to a new salary benchmark, and the tech world has cemented its reputation for handing out generous amount of dough. “The salary expectations heading back to ad land versus the experience and seniority required would have a big disparity,” explained Yar. 

Adding to the conversation, Ian Loon, CEO, media and digital, Publicis Groupe Singapore, Malaysia, Indonesia, said that in the agency world, there has been a greater outreach rather than voluntary application due to widespread shortage of talent. When asked if he expects an inflow of talent, Loon said, “Cards will continue to shuffle through the deck, and I’m confident that the short answer is ‘yes’.”

What can ad land do better?

The sophisticated view, however, requires ad agencies and networks to understand how talent aspirations have evolved to balance trade-offs across work/life dimensions. As such, Loon shared that talent is likely to return to agencies and holding groups that’ve been able to determine more attractive value propositions and equitable packages.

“The bigger need is to reduce attrition and find stability,” he added. Commenting further on the hiring freeze seen in the tech industry, Loon added that while 2021 was about accelerated recovery and global demand for skilled workers, what the world did not expect was a war with high geo-political implications, and China’s zero COVID policy enduring at length.

“Paradigm shifts have created immense market uncertainties and further disruptions, freezing capital markets. With tech firms largely operating on future earnings, many are reconsidering their bets and questioning how sustainable specific roles, functions and projects can last before they profit or break-even,” he added.

Nonetheless, competition to staff up is growing increasingly challenging and founder and CEO of M&C Saatchi Malaysia, Lara Hussein, told MARKETING-INTERACTIVE that this has to be tempered by the fact that there has been a change in talents' lives and work attitudes.

"Perhaps the great resignation is really the great realisation that work-life balance and the quest for flexibility and freedom are increasingly important factors in the modern workplace, especially for Millennials and Gen Z. The post-pandemic ‘blues’ means more people are burned out, have to reset, and need a greater purpose in life. Mental health takes priority, and rightly so," she explained.

According to her, agencies need to recognise and react positively to these fundamental changes.

Rather than rivalry and competition, agencies need to join forces to come up with strategic action plans on recruitment, remuneration and retention.

"No agency can do this alone. It needs to be a concerted effort, together with our clients and partners, to create an understanding on how we can ringfence our talents better. Guidelines on poaching between agencies and remuneration agreements should be tabled. By working together, we can keep our workforces productive longer," Lara explained.

While there is a perception the the ad land is not as "technologically exciting" in the way talents want it to be, Lara said the agency environment is fast generating new niches for content creators, developers, platform builders, UI/UX designers and more. This is all in tandem with increasingly digital client demands and evolving consumer behaviour. "So, yes, the talent crunch is real. The best way to solve it is to make our industry a magnet for the best thinkers - tech, digital, and indeed anyone else who values innovation and creativity," she added.

Managing salary expectations

Commenting on the current agency models and hiring practices, Jeffery Seah partner of Quest Ventures was of the view that adland is still trying to “find its own business operating model”. “Despite a better topline compared to the COVID-19 years, ad land has still not recovered the status to be able to recruit the best of tech for their own transformational journey. As such it might be hard for the senior people who left advertising for tech to re-enter back advertising hoping for a similar pay,” said Seah.

A more viable option, would be for adland to hire the new fresh faces in the tech industry rather than paying premium for years of experience. “Young talent leaving the industry, contrary to popular belief, might not be as expensive as we’d believe as many of them are paid in shares in tech firms so the base salary would still be affordable for agencies,” he added. 

Seah shared that before the downturn; many senior agency folks joined the tech industry and were paid a premium. Now with some of those roles seeing departures, he added that “it might be harder for these experienced individuals to find similar roles given the cost associated with them.”

Similarly, M&C Saatchi Malaysia's Lara said that the lure of advertising is just not as robust and dynamic as it used to be. As a result, staff turnover in some agencies in Malaysia has reached more than 30% and might be increasing.

"We have to bear in mind that attrition the other way - from agency people moving into tech companies - is a real thing, too. I do see creatives and strategists from agencies moving to both tech start-ups and established tech companies, especially in the fields of data, eCommerce and analytics," she said. According to her, the more ambitious ones are even building their own start-ups in gaming, retail, food, and much more.

ManpowerGroup’s Teo also commented that in her view, the talent that is impacted in the tech space are also more likely to move on to larger or profitable tech companies, or switch to working for end-user businesses as they need the tech expertise to help with digitising their business. Nonetheless, whichever route they choose, they will need to “manage their salary expectations to more realistic levels”, she added.

“Unlike in the past where tech companies are willing to pay a premium for in-demand tech talent, the salaries that most other companies can offer are lower. With a potential recession looming, many companies have cut their hiring budget and adjusted their pay packages,” she added.

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