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Friday, Dec 1, 2023

Startups Profit From Tech Cuts

With thousands of tech workers being laid off this year, it is easy to think the industry is going under. However, the mass furloughs are giving startup tech companies in Los Angeles and the San Fernando Valley the ability to add to their workforces, some analysts and recruiters say. The Glendale-based entertainment company Loop Media Inc., for example, has several job postings for roles in its marketing department. The Sherman Oaks-based advertising agency Ben Labs has openings for corporate operations, finance and human resources positions.

Rory Bebbington, founder and chief executive of Marina del Rey-based Fabric Staffing, said that during this time of year companies are looking at their results and making decisions on how to become more profitable in the following quarter.

“Companies are looking at their budgets for next year and they’re looking at how profitable they were in certain quarters, especially people,” Bebbington said. “And to be profitable in quarter one and the rest of the following year, they have to make cuts. The biggest line item on anyone’s profit loss sheet is salaries. That’s where cuts always start.”

High demand

Layoffs.fyi, a crowdsourced site that has tracked national tech layoffs since 2020, reported that about 160,000 tech workers lost their jobs last year. In January, Glendale-based software company ServiceTitan laid off 8% of its workforce, about 221 employees. In January, Microsoft Corp. announced it would dismiss 10,000 employees, and shortly after that, Alphabet, Google’s parent company, announced it was cutting 12,000 jobs.

As devastating as the layoffs have been, tech workers are still in high demand, especially those experienced in engineering, artificial intelligence and cybersecurity.

Fabric saw a slowdown in its business in December, but activity has heavily increased since then as more startups are looking to grow their workforces. “Business has definitely dramatically increased,” Bebbington said.

Fabric makes its revenue through a subscription service. By paying a monthly fee, companies gain access to Fabric’s pool of tech talent and can hire without any additional costs. Prospective employees go through a recruiting and background-verification process before being added to the company’s roster of eligible employees.

Since founding the company in 2016, Bebbington said Fabric Staffing has helped more than 200 tech companies, including Glendale-based Loop Media Inc., find employees.

Finding talent

Santa Monica-based e-commerce company Tapcart is among the many tech businesses taking advantage of the burgeoning pool of tech workers looking for work. It has openings in its engineering, sales and marketing departments. Lauren Morgan, director of human resources at Tapcart, said the company is looking to grow, but is being especially cautious about its new hires.

“We never wanted to have any layoffs, and we’ve been really (careful) about who we’re hiring, what positions we are approving, and really kind of putting our hiring managers through the wringer to make sure they’re only bringing adding any new positions that are definitely required,” Morgan said.

For companies that are wary of hiring at this time, Morgan recommends they reflect on their current team members. “Is there another (employee) that may not have a full workload? Is there someone that you can promote? You kind of look within the org to see what you can do,” Morgan continued. “We’ve done a lot of internal promotion, and that’s really one of our favorite things to do, because it’s not only helping the company, it’s really helping people’s careers excel as well.”

Morgan said that the current economic environment has produced an exciting time to find new talent. “We are in kind of a unique situation here, and it’s really great for us, because we’re also able to find some amazing talent that unfortunately were let go at some of these larger tech companies. And now they can find their forever home with us,” she said.

Hannah Madans Welk
Hannah Madans Welk
Hannah Madans Welk is a managing editor at the Los Angeles Business Journal and the San Fernando Valley Business Journal. She previously covered real estate for the Los Angeles Business Journal. She has done work with publications including The Orange County Register, The Real Deal and doityourself.com.

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