As tech companies adjust to increasing economic pressures, tech layoffs become common. During the first months of 2023, tech companies laid off an estimated 124,000 people. That’s a staggering increase from the 161,411 tech layoffs in 2022. Tech giant companies like PayPal, Spotify, Google, Microsoft, and finance behemoths, like Goldman Sachs have recently faced tech job losses.
The global technology industry was impacted, too. In the case of Latin America, many local startups were also forced to lay off their workers – Ebanx, Olist, and Bcredi in Curitiba and 61 more companies in Sao Paulo, Brazil; Plerk and Kueski in Guadalajara, Mexico; and more.
We interviewed senior software developers from Argentina, Brazil, and Mexico to understand how the global economic recession and tech company layoffs have impacted the Latin American tech industry. Here’s a sneak peek into what we’ve discovered.
So, what’s happened?
In the United States, tech company layoffs have become increasingly frequent since the start of the pandemic three years ago. At the same time, Latin American developers have seen unprecedented growth opportunities for remote work with U.S.-based tech companies. However, these new positions have created a talent crunch in tech across the Latin American labor market, and local startups have difficulty filling tech positions. As those tech companies struggled to find qualified applicants, smaller startups felt left behind and unable to meet their hiring goals.
The tech sector was rocked in 2022 by mass layoffs, with Latin America feeling this effect severely. Francisco, a developer from Mexico with 17 years of front-end practice, with whom we spoke about the recession, notes:
“The current global workforce crisis is very different from the pandemic and impacts the whole world. During the Covid-19, the demand for tech talent was higher, and now we’re witnessing the opposite.”
According to a study conducted by the Workforce Institute, 69% of tech employers were experiencing tech talent shortages as early as 2022. In a single week alone in December, tech startups across the region saw 1,000 job losses due to an end to venture capital and global tech developments. Established tech companies such as the Mexican cryptocurrency exchange Bitso and Brazilian game developer Wildlife were among the hardest hit — slashes of almost a quarter and a fifth of their workforces. While it was a devastating time for tech workers, it showed that tech still faces economic shifts like any other industry.
Allan, Node.js/React.js senior developer from Mexico, comments on the job cuts in LatAm:
“Our situation with recession and tech company layoffs is pretty similar to that in the United States. There have been a lot of layoffs tech companies decided to make, with not just software engineers impacted but employees in general.”
Were Senior developers impacted?
Senior developers were also hit despite non-technical roles like HR staff, marketing, sales, and customer support being first to face cuts during layoffs. Local startups prefer investing in teaching junior developers rather than keeping senior talent aboard. Many local tech firms have been unable to stay competitive when offering higher salaries.
“There’s an abundance of [junior developers], and even though it takes money and time to train them, it pays off,” – Martín Daguerre, co-founder of Lagarsoft, an Uruguayan startup.
This produced a shift in the job offers senior developers receive in LatAm. Abner from Guatemala, a front-end developer with 8+ years of experience, shares that layoffs have impacted him in the US tech company from California. Still, luckily it happened at the beginning of the crisis.
“Many of my friends were impacted by the cuts, not only developers but also in other roles, HR, for example. Job offer supply and demand are very distant from each other now. We are not receiving as many offers as before, they are not very interesting, and it’s harder for middle and senior developers with 4-12 years of experience to get hired.”
Federico, a Node.js/React.js developer from Argentina, says he has never seen a situation like this before:
“We are receiving fewer offers. We used to receive 2-3 per day, and now we receive 2-3 per week, and salaries are also lower. We are now paying attention to recruiters’ offers and reading them.”
Still, not all of the interviewees agree with that. As for Sergio, a front-end developer from Mexico, it depends on the developer’s skills:
“Great developers know how to find opportunities, whereas newbies have a harder time finding a job because of lack of experience and the fact that the tech sector isn’t willing to take chances now.”
Also, David Israel from Mexico (10+ years) notes that another thing he observes about big tech layoffs is that contractors are the first to face the problem.
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Challenges of the new normal
Today’s big challenge for local software engineers is decreased salaries and available opportunities. Here’s how Federico, a 15+ years software developer from Argentina, describes the current workforce market in Latin America: fewer offers received, hirings in the tech sector are frozen, and fewer positions with good salaries.
Roberto, a React.js developer from Portugal with ten years in the industry, admits a vast shift in Web3 startup salaries in recent job openings:
“There are massive layoffs in the Web3 space, HR mostly. Developers are now considering Web2 companies, and this is because salaries are not that different now, around $80K for both Web3 and Web2, whereas, before the recession, $100K was a common salary for an average Web3 tech firm.”
The tactics local software talents use to minimize the impact of layoffs differ. Francisco claims his friends had to renegotiate their salaries, which saved their positions. Eduardo, a React.js developer with five years of experience, says that when looking for new opportunities, he now pays attention to the company’s stability and funding before considering a job change. German, a Node.js developer from Argentina, agrees with this tactic; he considers the company’s funding every time since he has worked in startups and was affected by multiple layoffs.
Abner adds that it’s necessary to learn new tech to have more options in case of job cuts:
“If you’re a senior dedicated to one framework, it’s harder to find a job fast, so you must learn many technologies.”
As layoffs hit family budgets, additional income streams are a great strategy until one finds a new opportunity. For example, a friend of David Israel was laid off suddenly and is now doing freelance work while looking for a stable job. He had no chance to prepare for that economically, so freelancing turned into a rescue for him.
Where pitfalls turn into prospects
Not all the developers we spoke with see trouble in recent layoffs and economic recession. Diego, a Mexican front-end developer (5+ years of coding), is one of them:
“I don’t think job-seeking has changed with these job cuts. However, many people are changing to remote to have more of a work-life balance, and it’s not strictly related to the recession.”
While tech companies are reducing headcounts to survive the pandemic-related headwinds facing the tech industry right now, it can also make room to hire top tech talent otherwise unavailable. Marcos, a 10+ years front-end developer from Mexico, says that Latin American countries got a lucky ticket since international companies are now looking for LatAm developers. Sure, there have been mass layoffs, but they bring a lot of opportunities to the table too.
“There is an explosion of options to get better, a lot of great opportunities to focus on learning and preparing for a better future.”
His counterpart, Sergio, adds:
“Today’s job cuts are just a trampoline for the technologies, and the tech sector is growing a lot.”
The bottom line
The tech sector in Latin America certainly isn’t immune to the economic recession. However, we believe its talent market will continue to be on the rise. Tech giants started to poach great talent at lower rates; smaller companies continue looking for talent pools offshore, too. All these factors create massive opportunity for local software development market growth.