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As we round out 2022, I’ve spent a lot of time reflecting on the state of the tech industry and hiring landscape. The second half of the year has been tough for the tech industry, due to increasing layoffs and broader economic concerns. However, I see signs of hope. There are many positive trends that make me optimistic for 2023, based on my conversations with business leaders and diving deep into Karat’s data with my team.
Despite the macro economic conditions, at Karat, we’re finding that tech talent is still in high demand – whether it is for backfilling existing positions or net new roles. This is true among companies that have done layoffs but still have many engineering job openings. Tech roles are still needed to provide product and operational support, as well as to drive digital transformation.
The big change is that where engineers are choosing to work has shifted. For the first time in two years, Karat’s hiring data shows that large enterprise companies – banks, insurance companies, etc. – have eclipsed hyper-growth companies as the primary destination for developer talent. Candidates who are actively seeking jobs want stability in this volatile market. They’re trading off the potential payoff of fast-growth startups for safer bet companies that provide cash-based income and what they view as more stable employment.
Another finding in this environment is that now is the time for companies to hire the best technical talent. There are more engineers on the market –and developers with remarkable experience– so smart companies can be particular about what skills and potential they’re after in candidates. This is also an opportunity for companies like banks and insurance companies to raise their hiring bars, given the quality of engineers seeking out increased job stability. Not surprisingly, at Karat, we’ve found that candidates are more likely to join a company if they view the interview process as more enjoyable.
What does all of this mean for 2023? Here are my six predictions:
With so much unrest and constant change in the world, having happy engineers who are focused on innovating – as a core component of their jobs – will be essential. In today’s markets, engineers are still in demand and critical to a company’s ability to operate. Companies that want this top technical talent will have to invest in their engineers’ overall well-being. This isn’t just compensation and benefits – it’s also ensuring engineers are working on meaningful projects, feel valued by their teams, and are involved in strategic decisions. And this kind of investment in engineers’ morale needs to start before their first day on the job – it has to be part of their hiring process.
Historically, some companies have looked to India or other international regions for hiring because they saw it as an opportunity to spend less money on great tech talent. But in 2022, we saw a shift across all of Karat’s customers. They want the best possible talent in the market – and that talent isn’t limited to the United States.
As companies move to solve for the quality of tech talent, they’re turning to Karat to set a global talent bar in their quest for top tech candidates – seeking talent across geographies. Our own business at Karat has expanded threefold year over year in India and EMEA, and we’ll continue to be more global in our makeup as we serve our customers’ needs to hire globally.
We recently looked at Glassdoor data and found that the average company had only 55% of candidates indicate they had a positive interview experience. And the numbers were even worse for large companies in our analysis, where 40 of the top 100 companies had more than half of their candidates rate their interview experience as neutral or negative.
The quality of an interview affects a company’s bottom line: according to Karat’s analysis, hiring efficiency jumps by an average of 25% for each additional star the candidate rates their experience. With Karat, we are helping companies move away from the world of asymmetry and clunkiness found in traditional interviews. We have made the interview process extremely quick, transparent, and flexible for candidates. Tech candidates can choose when they want to interview – it turns out Sunday morning is a very popular time! And, we give candidates the option to redo interviews. According to our data,the simple act of giving candidates a second chance at a job interview reduces anxiety and improves hiring yield for companies. We will continue to invest in improving the interview process in 2023 – ensuring that candidates have an enjoyable interview and investing our efforts to continuously improve our customers’ interview processes.
Historically, companies have focused on job candidates’ credentials and existing skills. In 2023, the best companies will move past this outdated approach that too often leads to overlooking more diverse and uniquely qualified candidates. Forward-thinking organizations will focus on candidate potential. They want to hire people who can learn – and have a big propensity to grow. These are the hires that will help companies think about problems differently, and identify new products to build that are outside of the traditional thought process.
At Karat, we’ve constructed interviews in a way that helps us identify the ‘learning signals’ of candidates, using a combination of human + tech. Because that’s what matters in a career– you want to hire a talented engineer who can evolve their skills based on the evolving needs of the business and new technology. Looking ahead to 2023, Karat is digging even further into how to identify and assess a candidate’s potential using fresh question formats, fusing research and design, and more.
In this economic environment, we’re increasingly seeing companies cut back on operating expenses. In past economic dips, it was typical to see similar cuts to a company’s ‘diversity team’ – where it was treated as a nice to have but expendable in a tough economic environment. As we saw in 2022, that calculation has changed. In 2023, companies will still be prioritizing their diversity, equity, and inclusion efforts. In every conversation I’ve had with engineering, talent acquisition, and company leaders, I’ve heard the same thing – they are incredibly invested in building a more diverse technical workforce, even in these economic conditions. This is consistent with Karat’s data, where we found that top-performing engineering leaders are more than three times as likely to strongly agree they have the resources needed to make increasing diversity a reality on their teams.
In 2021, we launched the Brilliant Black Minds program with the goal of doubling the number of Black software engineers in the U.S. And in 2022, we saw great momentum for this program – Serena Williams invested, we hired a strong leader to drive the program forward, and five companies signed on to be our Partners of Brilliance (prioritizing hiring from the Brilliant Black Minds community). In 2023, we will build on this progress and scale our program so that any organization who wants to hire from the Brilliant Black Minds talent pool will be able to.
In 2022, recruiting teams felt the brunt of layoffs. It also exposed how challenging the recruiter hiring model is – hiring a team of recruiters during boom times, only to lay them off when the market appears to be cooling. It’s time to rethink this business model. Elastic hiring flexibility will be key in the future, reducing the need to scale up and down talent teams based on market dynamics. What makes this possible is identifying the right technology force multipliers for recruiters. For example, at Karat, as we work with clients over time, they see continuous year over year sourcing quality and efficiency improvements as insights from cross-industry hiring trends fuel more effective recruiting. It’s not uncommon to see recruiters improve their onsite to offer rates by 2x-3x over time when armed with the best data. I see huge potential in applying this model to the broader recruiting business.
I don’t pretend to be an expert in predicting the future, but I do feel optimistic that despite challenges in the economy, there are bright spots and opportunities for forward-thinking companies and job candidates alike. My hope is that we’ll keep learning and keep improving the technical hiring process to unlock opportunities for great talent and companies around the world.
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