Shopify layoffs could bring a slew of high-quality candidates into the Ottawa job market, presenting a unique opportunity for local employers.
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Recently announced Shopify layoffs are expected to bring a slew of high-quality candidates into the Ottawa job market, presenting a unique opportunity for local employers, one HR observer says.
On Thursday, the Ottawa-based e-commerce giant announced plans to cut 20 per cent of its workforce in an effort to refocus operations. It’s the second major layoff from the company in less than a year.
Shopify isn’t the only major tech company making cuts in 2023. In the last few months, companies globally have been letting go of staff, including big names like Google, Amazon, Microsoft and Zoom, as well as smaller startups across multiple sectors.
While these layoffs have caused sea changes in major tech hubs, particularly in the United States, Ottawa has remained relatively unscathed, according to Sarah Doughty, vice-president of talent operations for Kanata-based tech recruiter TalentLab.
“It’s actually still stable,” she said. “But it’s not as robust as it was a few years ago. There’s no doubt (there are) concerns about volatility with tech investors. There have been some effects in Ottawa. There’s been a slowdown, but nothing that I think we could really consider as a full-on downturn.”
According to Statistics Canada, the rolling three-month average in Ottawa-Gatineau tech employment was down by 6,000 in April compared with March.
But Doughty said these numbers can primarily be attributed to larger foreign companies letting go of a surplus of remote workers hired during the pandemic.
Those are the cases where tech workers are more likely to take a significant pay cut, she added.
“With markets in Silicon Valley, in Austin, in Oregon, where they have established teams, paying above the local (salary) norm in Ontario was very cost-effective compared to what they would pay talent in their own backyard,” said Doughty.
“We’ve seen salaries skyrocket. If you’re getting an inflated salary based on a foreign market, because of the high competition globally for talent, once that competition has subsided, you may have to go back to your local salary market and kind of come back a little closer to earth.”
Local companies haven’t felt the same kind of market pressures, she said. Instead, layoffs like Shopify’s can be attributed to targeted restructuring decisions that prioritize future growth and could present positive possibilities for the tech labour market in Ottawa, Doughty argued.
A regulatory filing showed Shopify had 11,600 employees at the end of 2022. Twenty per cent of that amounts to about 2,300 people.
While it’s still unknown how many Ottawa-based Shopify employees will be affected by the layoffs, Doughty expects the potential influx of high-quality candidates could shake up the local job market in a good way.
“Shopify has done a great job building a really strong employment brand,” she said. “Chances are what we’re going to see is some companies, particularly startups or companies in high-growth phases, taking this as an opportunity to capitalize and make a few more hires than they had planned. They know Shopify has great employees and they will target Ottawa as a place to hopefully pick up some great hires in the next few months.”
This could mean that laid-off Shopify workers, at least in Ottawa, may not wait long before they find a new position, she said. That is, if they can keep up with the pack.
With a larger pool of talent available, Doughty said job-seekers may start to feel the pressure. Some employers, she added, may try tightening their employment requirements and holding candidates to a higher bar in order to bring in the best of the best.
“Anytime we see a layoff like this where we have a lot of the same talent going to the market at the same point, unfortunately it can be really competitive,” she said. “There’s a lot of them and there’s only a few jobs available.”
Elsewhere in Canada, Shopify’s layoffs will add a slew of new workers to the job-hunting pool at a time when experts say candidates are taking longer to find their next gig.
“The question is will they immediately find that (next job)? Maybe not,” said Tricia Williams, director of research at the Future Skills Centre at Toronto Metropolitan University. “There might be some … transition disruptions as they sort out what their next move is.”
Williams said that tech workers are still in high demand in Canada, something April Hicke, co-founder of women's tech and hiring collective Toast, is also seeing.
However, both said the job market that those laid off from the sector are facing has changed. While hiring is steady for engineer, cybersecurity and artificial intelligence roles, Hicke said sales, people and culture, and product jobs are less in demand and more likely to be part of layoffs.
“While layoffs might generate headlines, probably the more substantial shift in the job market is really the hiring freezes that have happened at lots of places,” said Brendon Bernard, senior economist at job posting site Indeed.
Software development postings on his company's website last spring were more than double their pre-pandemic level, but have “given all those gains back” and are slightly lower than they were in February 2020.
Those looking for jobs aren't being snatched up as quickly as they were at the pandemic's onset, when tech valuations skyrocketed.
“In Toronto, we're seeing about six months is how long it's taking people to find another thing, and more so in Calgary. I would say nine months-ish,” Hicke said.
And many are taking a pay or title cut just to be employed again.
“We're seeing people who are definitely operating at a director level, taking manager positions because it's the only thing available,” she said.
Whereas workers were jumping to roles that would pay them from $60,000 to $100,000 more at the height of the pandemic, Hicke now sees some taking 10 to 20 per cent pay cuts.
The average tech worker salary last year was $133,000, according to Hired, an employment platform that compiles average annual salaries.
Its data – based on 907,000 interviews across more than 47,750 active positions available between January 2019 and June 2022 in the U.S., Canada and the U.K. – found almost 42 per cent of tech workers think employers have more power and doubt that will change in the near-term.
About 27 per cent felt job seekers had more power but expected that to change in the near-term.
But Williams said, “I wouldn't quite say employers have the upper hand yet. We have both a labour shortage but also a skills shortage, so the people who are looking for work generally don't have the skills that are being asked for in the marketplace,” she said.
“But I'm pretty confident that a lot of the Shopify workforce will have relevant skills for the broader labour market.”
However, she said some laid-off workers might not find themselves in the traditional tech jobs or at the tech giants they are accustomed to working for. That means tech workers could crop up in tech jobs in completely different sectors like agriculture, Williams said.
“They might not get a job specifically in tech, but tech is infiltrating every kind of economy.”
For many companies who have long tried to lure tech workers, the market's current conditions are a helping hand, Bernard pointed out.
“They might be finding it easier to find candidates just because there are other parts of the economy where demand for tech workers was so strong like a year ago and now has really come down to earth.”
– With files from the Canadian Press
