Griffin on Tech: As tech companies tighten their belts, we should double down on digital skills

The tech layoffs in the US we’ve read so much about in the last six months are starting to hit our own big tech companies.

Sharesies said last month it would shed staff as it undertook a restructure and Xero announced yesterday a cut of 10 - 15% of its global workforce. That equates to 700 - 800 jobs and many of them will likely go from the New Zealand operation.

Xero’s share price jumped nearly 11% on the news, which shows precisely what investors are expecting in uncertain economic times - costs to be reined, belts to be tightened.

“15% is a significant number of workers and Xero now joins the club of Sharesies, Microsoft, and many other tech companies putting profit before the people who are working to grow the company,” The Aotearoa Tech Union tweeted yesterday.

Xero's Wellington HQ - how many will go from here?

Tech over-expansion

That’s true, but Xero joined other large tech companies in rapidly expanding in recent years, buying into the idea that the huge bump in digital activity spurred by the pandemic was here to stay. They are now correcting the course which makes sense.

Our homegrown tech companies by and large run quite lean so I’m not expecting a glut of tech workers on the market here unable to find work. While we want a thriving tech sector full of exciting start-ups taking Kiwi technology global, the real focus at the moment needs to be on enabling all of our businesses to harness the advanced technologies that are going to define the rest of the century.

A Gallup study commissioned by AWS and released this week shows that New Zealanders who use “advanced digital skills, including cloud architecture or software development” contribute an estimated $7.3 billion to annual gross domestic product (GDP).

That’s in part down to the 19% higher salaries workers with these skills can command compared to those who may have a similar educational background, but don’t use the skills. But according to the study, which surveyed more than 1,448 working adults and 374 employers in New Zealand, 27% of organisations running most of their business in the cloud reported a doubling of annual revenue, compared to 9% that don’t use the cloud or only use it for some of their operations.

The tech talent issue

There’s a lot of self-interest in that conclusion for AWS, which has said it will invest $7.5 billion over the next 15 years building data centres and employing people to run them. But it's in line with most studies worldwide - use of the cloud encourages the uptake of advanced digital technologies like AI and machine learning, edge and quantum computing, IoT (Internet of Things), blockchain, and cryptocurrency.

Those are the technologies that will help transform many businesses in the next decade - if those businesses invest in them and the skilled staff to use them. On that front, we lag behind many other countries we like to compare ourselves to in our uptake of advanced digital skills.

While the vast majority of organisations surveyed (77%) agreed that digital skills would be important to their business over the next five years, 64% also reported challenges finding the talent to harness technology.

77% of New Zealand employers surveyed reported that digital skills will be important for their business over the next five years, but 64% said it is challenging to find the talent they need. The fortunes of tech companies ebb and flow, but the technological change they represent is permeating every organisation and that’s not going to change.

“We did support the former digital economy communications minister David Clark in his plan to really drive widespread digital thinking and I loved the vision Mahi Tika, Mahi Tahi, Mahi Ake, (trust inclusion and growth),” says Tiffany Bloomquist, Country Manager, Commercial Sector, AWS New Zealand.

“But we have to have the investments behind that to really drive the impact that we want.”

Start small, think big

In other words, the government now pony up with some cash to kickstart the programmes needed to match the rhetoric and vision in its digital strategy. But businesses have work to do as well. Bloomquist says adopting advanced digital technologies doesn’t need to be a big-bang exercise.

“We actually need to break it down into building blocks of how they adopt technology, how they experiment with it, how they try new things,” she says.

The micro-credentials and training schemes the likes of AWS, Microsoft and Google offer are part of the solution given it is their platforms many Kiwi companies are using. AWS this week partnered with Te Pūkenga – New Zealand Institute of Skills and Technology to launch AWS re/Start Associate a new course in its programme that’s aimed at helping unemployed or underemployed IT workers “modernise their skills and pivot to mid-level cloud careers”.

AWS says that “globally AWS re/Start is a free multi-week, cohort-based workforce-development program that connects more than 98% of graduates with job interview opportunities”.

Bring it on! We need more of these schemes to make it as easy as possible for workers and employers alike to get serious about adopting the advanced digital skills that can add billions of dollars of value to the economy.