Navin Chadda, one of the world’s top-rated tech investors believe this is the best time to start a company because by the time the markets turn around, you will be in the market with the product.
Freelancer and startup numbers are likely to rise in 2023, even against the odds
Following a spree of tech industry layoffs, tech talent is back in the jobs market. But those made redundant may be losing faith in the tech titans and be more compelled to turn to a promising freelance career or even join forces with others to launch startups, Katherine Steiner-Dicks reports
November and December saw the bulk of 2022’s layoffs in the tech industry. By the end of 2022, there had been 1,510 layoffs at tech companies with 236,969 people impacted, reported True Up Tech, a hub that tracks technology companies and jobs.
This includes layoffs across top startups, big tech and tech unicorns, those privately held startup companies with a value of over $1 billion.
Digging beneath the headlines, it seems that in November alone which saw nearly 60,000 layoffs, over 29,000 (50% give or take) were from the tech leaders Amazon, Twitter and Meta, the parent group of Facebook, Instagram, and WhatsApp. December saw just over 26,500 people let go from 196 companies.
Some companies that have really grown because of the continued growth of online purchasing and payment, have also been compelled to act. This includes Shopify, the eCommerce platform, as well as PayPal and Stripe, the payment processors, which have binned thousands of roles, indicating a significant desire to cut costs and perhaps reflecting a slowdown in the growth of online purchasing.
The losses are not restricted to technology roles within these businesses. Amazon, which hired 700,000 between Jan-Sep 2021, has of course a huge warehousing and logistics operation. In November, it started widespread layoffs within corporate ranks.
As a side note, in another expression of market forces at work, up to the end of October 2022, short sellers had pocketed $22.6 billion by betting against the share prices of Meta, Amazon, Microsoft, Apple and Alphabet, Google’s parent group. Perhaps the signs were already there to see.
What do tech layoffs mean for the freelancer and startup economy?
With so many tech skills being released back to the jobs market, there are significant opportunities for them to go freelance, join a venture capital-backed startup or even launch their own company to carve out their own destiny and on their terms with the support of freelancers.
Navin Chadda, one of the world’s top-rated tech investors positioned at number 5 on Forbes ‘Midas List’ said: “This is the best time to start a company because by the time the markets turn around, you will be in the market with the product.”
There are promising signs of jobs growth later in 2023, such as lower interest rates and decreased inflation. Expect renewed interest in interim, contract, freelance as well as permanent tech job opportunities as 2023 comes around, said an ETZ Technologies report.
Off-payroll, stealth taxes and layoffs: how they will impact the self-employed in 2023?
As of October 2022, there were around 4.2 million self-employed workers in the United Kingdom. Self-employment in the UK has grown steadily, from a low of just 3.2 million in December 2000, to a peak of over five million at the start of 2020. In the wake of the Coronavirus (COVID-19) pandemic, however, self-employment has fallen to levels not seen since the middle of 2015, according to research.
The consequence of the forced remote-working experiment is that freelancing has had its booster shot and is now valued as a career in its own right
Dave Chaplin, CEO of tax compliance firm IR35 Shield
Freelancer numbers are likely to rise in 2023, against the odds. IPSE research published on National Freelancers Day 2022 reported that two in five (39%) of UK employees have considered working for themselves one day, whilst 46% could see themselves launching a side-hustle – and 12% already have one. It’s possible that economic conditions will bring forward this choice for many.
Reflecting on 2022 and what could transpire for freelancers in 2023, Dave Chaplin, CEO of tax compliance firm IR35 Shield said, “Covid-19 taught firms that many people could work productively from anywhere, provided they had a laptop and decent internet connection. No more expensive and time-consuming commuting for workers, a reduction in costly office space for businesses, and an ability to tap into a wider pool of workers globally. That trend is here to stay.”
“The consequence of the forced remote-working experiment is that freelancing has had its booster shot and is now valued as a career in its own right. Companies have recognised the enormous benefits of tapping into professional expertise on an as-needs basis as they move from having fixed permanent workforces to dynamic and flexible ones,” said Chaplin.
In 2023, I see UK firms continuing to struggle to hire UK talent due to the fallout of the Off-payroll reforms. The talent pool is drained but the world is opening up new opportunities for the UK’s freelancers
Dave Chaplin, CEO of tax compliance firm IR35 Shield
Chaplin said working from Home (WFH) and Working from Anywhere (WFA) are acronyms that are now common business parlance, and the pool of talent is expanding, giving hiring companies significantly more choices.
“Likewise, freelancers can cast their nets wider and work nomadically as firms acknowledge that presenteeism does not necessarily mean better productivity,” he said. “Freelancers can deliver the speed, skill and flexibility essential to an organisation’s capacity to function in a faster, more fragmented and less predictable environment. We also see countries offering people competitive deals to choose their country as the place to settle.”
Off-Payroll rules to incentivise talent to leave the UK
With the Off-payroll legislation here to stay, many freelancers and contractors are opting to move and work abroad, said Chaplin, having left their roles in droves.
“In 2023, I see UK firms continuing to struggle to hire UK talent due to the fallout of the Off-payroll reforms,” said Chaplin. “The talent pool is drained but the world is opening up new opportunities for the UK’s freelancers.”
IPSE said in a report that it will be watching trends in the self-employed population very closely in 2023, but it will be even more important that government does the same.
“As more people choose to work for themselves, the importance of addressing holes in public policies for the self-employed grows with it – from taking firm action to tackle late and long payments, to developing a sustainable solution for long-term savings,” said IPSE.
Worker rights bill on hold leaving umbrella companies unregulated
Off-Payroll and umbrella companies go hand in hand, which can be a risk for freelancers and contractors. That is another reason that UK freelancer numbers may still rise following tech layoffs, but whether they start in the UK is another story, as Chaplin pointed out.
Crawford Temple, CEO of Professional Passport, an independent assessor of payment intermediary compliance is concerned that the government’s decision to put worker rights on the backburner will only lead to more unscrupulous schemes for contractors to fall into.
“It has been ten months since the Government’s call for evidence into the challenges that the umbrella sector is facing closed,” said Temple.
The umbrella sector harbours models that are causing harm to people’s pockets
Crawford Temple, CEO of Professional Passport
Temple appreciates that the Government has been faced with its own administration challenges with the comings and goings of new PMs, Chancellors and Ministers, but said, “it is simply not good enough and is no excuse for ignoring important and pressing issues that are having an impact on the lives and livelihoods of hard-working people.”
Temple said that in an unregulated industry, “the umbrella sector harbours models that are causing harm to people’s pockets.”
A cost-of-living crisis is simply going to lead to a rise in the number of schemes and the number of workers entering into such schemes. That is set to get worse in 2023 unless we tackle the malpractice. Decisive action is needed.
Crawford Temple, CEO of Professional Passport
These models, he explained, “purport to be genuine umbrellas but are tax avoidance and disguised remuneration schemes that are duping workers into signing up for them with the promise of more take-home pay.”
“A cost-of-living crisis is simply going to lead to a rise in the number of schemes and the number of workers entering into such schemes. That is set to get worse in 2023 unless we tackle the malpractice. Decisive action is needed,” said Temple.
“The Government needs to tackle the dodgy schemes that are capitalising on people’s financial hardship as a matter of urgency,” he said.
“Enforcement is key,” said Temple. “By targeting the architects of these schemes, the Treasury would see a fair return on the investment and save the country millions of pounds. It makes perfect economic sense. So, I would urge the Government to publish the results of its call for evidence without delay so that the industry as a whole can work collegiately and collaboratively with policymakers to find a way forward for the good of the sector and drive-up standards and drive out non-compliance,” said Temple.
Related articles:
Can creating a lifestyle business beat being a unicorn? – Freelance Informer
Off-payroll working: firms spending 74 times HMRC’s estimated cost – Freelance Informer
Middle earners to face £20K stealth tax, says new research – Freelance Informer
HMRC Off-payroll impact report a “statistical howler” says IR35 expert – Freelance Informer
Contractor input excluded from Off-Payroll report – Freelance Informer
