Big tech is facing more challenges than ever before, forcing companies to adjust their priorities amid a challenging fundraising market. Just a few years ago, in booming funding times, jobs were plentiful and employees left their companies en masse — the “great resignation.” Companies across verticals struggled to fill positions as prospective employees weighed the many options in front of them. Today, things could not be more different.
The technology industry has seen more than 86,000 layoffs in 2024 alone. At Embroker, our recent Tech Risk Index report found 44% of tech companies are struggling with employee retention at the entry and executive levels. Which raises the question: is tech losing its appeal for workers/?
People, prices, problems
It’s clear there is significant concern over cash flow within the industry: 59% of tech leaders report struggling with the rising cost of business, despite the fact that only 20% report prioritizing funding in 2024. Following the rising cost of business, tech companies’ top threats included inflation (54%) and rising interest rates (37%). While these financial concerns won’t go away immediately, further interest rate cuts should help in due time. Tech companies are expected to see a variety of upswings, from an IPO market rebound and increased M&A activity to an increase in pre-deal investor activity, above record-breaking 2021 levels.
When tough times hit the tech industry, leaders shifted their post-pandemic priorities from people to sales and revenue: 43% of tech companies are prioritizing sales and revenue growth amid rising costs of operations. But does this fiscal push mean brighter skies ahead? Perhaps. More than three-quarters of companies are optimistic about the future due to promising financial performance in the first half of the year, along with potential market growth, new product offerings and successful automation of internal processes.
What’s next?
Having faced a multitude of risks over the past two years, 66% of tech companies have already changed or plan to change their approach to risk. But that means one-third of companies still may not know where to start. The top four ways tech companies address their risk response approach can serve as a good starting point for those who may feel lost:
- Strengthen regulatory compliance measures: Identify all applicable laws and regulations that affect your business. Regularly assess your company’s compliance measures through internal audits, and update protocols to keep pace with changing laws, regulations and industry standards.
- Implement risk monitoring systems: One of the first steps you can take to protect your business is to implement risk monitoring systems. New technologies like AI can provide companies with time and cost-efficient tools that will help monitor new risks in real-time.
- New or higher insurance limit policies: Accidents happen — insurance is there for you just in case. From cyber/tech E&O to D&O, insurance policies can save your company from going under. Our report found that close to a third of tech companies don’t believe their insurance policies would fully (or even partially) cover them in a breach. This lack of confidence in cyber insurance proves the need for improved insurance safety nets across all types of risk.
- Improve crisis management protocols to respond to unexpected events: If there’s anything learned in life, it’s that anything can happen. Take CrowdStrike for example: businesses across the world faced business interruption and didn’t have protocols in place to keep their company afloat after being affected by the outage. Crisis management protocols for your business to consider can include communication strategies, backup systems and steps to quickly restore operations.
Risks are inevitable for tech companies. As they continue to evolve, it’s important for organizations to stay ahead of the risk management game. Tech companies’ risks aren’t just going to go away, especially when it comes to people. And while things may seem down right now for tech companies, there are some great opportunities ahead. Looking forward, promising financial performance, the Fed’s recent decision to cut interest rates, and increased sales and revenue are three ways that may be able to take a little pressure off of hiring and retention rates.
Ben Jennings is chief executive officer for Embroker, the leading insurance technology company that’s radically improving the way insurance works for businesses of all types and sizes. A seasoned global technology executive, Ben brings more than 25 years of experience in sales, marketing, business development, customer success and alliances to the role. Ben is responsible for driving new client acquisition, installed base retention, customer success and overall go-to-market strategy for the company.
Related: