The past three months have seen a significant drop in the number of roles being hired by UK startups. This news comes after global economic uncertainty that has driven tech stocks to slump in recent months. Whilst Version Controls (VCs) become increasingly cautious, some of Europe’s most successful startups have also begun to lay off staff, whilst others dial back on any future hiring plans.
The looming economic difficulties facing tech startups are causing a large number of companies to batten down the hatches amongst the current global uncertainty.
Impacts within the Tech Sector
According to data shared with Sifted by job platform Otta, UK startups are notably widely refraining from hiring new employees in the past three months.
Otta pledges to help in the daunting process of finding a new job in the tech sector. Its platform recommends top-quality companies and roles to help with the application process of its audience.
Sifted connects its community with jobs within European startups and innovators. The Financial Times backed media platform has been cultivated to re-shape the entrepreneurial ecosystem with the journalism it provides. But these job platforms have found that 20% fewer job listings have been provided in the past three months, and that the number of live roles within the industry has also dropped by 13%.
Tech platforms such as Klarna have taken a particularly big hit in the industry. The company is a prominent indication that some of the most successful tech companies are preparing for the worst, as they face their latest challenges.
At the end of May of this year, Klarna – the buy-now-pay-later (BNPL) platform – announced that it would be laying off 10% of its global workforce. This announcement came after the latest down round of the fintech giant significantly lowered its valuation to around $30 billion.
Investigating this Drop
In the case of Klarna, the recent downwards figures of the company have come after the wider scrutiny from regulators regarding issues within the BNPL sector. After concerns were raised in the UK and Sweden, BNPL purchases began to be regulated amid mounting pressure from both regulators and consumer groups.
A regulatory crackdown may also be a possibility in the scale back of Klarna’s valuation.
The down round of Klarna also took place in May, a notably difficult month for the industry – it witnessed a drop in the stock market in addition to suffering the continuing effects of the Coronavirus pandemic and ongoing war in Ukraine. These factors have contributed to surging inflation levels and general feelings of uncertainty in the global economic climate.
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Other successful European tech companies have also shown signs of struggle as a result of recent challenges faced by the sector.
Getir and Gorillas both serve as online supermarkets and grocery delivery services that operate throughout the UK.
But both these platforms also plan on making considerable cuts to their workforce. Whilst Getir is laying off around 14% of its workforce (around 4,500 roles), Gorillas has also said that it will halve its headcount at headquarters.
Both companies found particular success during the Coronavirus pandemic, due to the restrictions set on in-person shopping. Yet despite this, companies such as Getir and Gorillas have witnessed a decline in their success as the population returns to their pre-pandemic buying habits.
The Broader Picture
A look at the industry more broadly, however, would show that the picture is not all doom and gloom for the UK technology scene. Not all tech sectors have witnessed such dramatic drops in their listings and, for example, companies tagged as “fintech” job listings have dropped by just 8%.
Furthermore, whilst the number of available roles is decreasing, the number of applicants made on Otta has stayed the same. The job platform also showcases that across Europe, many tech companies have kept their doors wide open to new recruits.
Overall, the tech industry in the UK continues to thrive. More than a third of total investment into Europe in 2021 was endowed into UK tech, and the country is currently fourth in the world for tech investment at a valuation of around £32.6 million.
Innovation and investment in UK tech startups remain booming, and the industry continues to hold a strong place in the global market. Nonetheless, companies consisting of BNPL platforms and other ‘eCommerce’ startups – which include speedy delivery companies – are evidently preparing for a downturn in their fortunes.