Headcount growth is slowing as startups prepare for worst-case scenarios • TechCrunch

Recent titles have dominated by massive layoffs in the tech industry and especially at giants like Meta, Amazon, and Twitter. But it’s not just the big names pulling back on staff — private SaaS companies have similarly implemented hiring freezes and headcount reductions for nearly half a year now.

This is not surprising, given that hedge funds began to focus more on capital performance and the “Rule of 40” earlier this summer when it became apparent that the “growth at all costs” mentality ” fell out of favor and the goal was to widen the runway to weather the storm.

To better understand the volatility of headcount in the private market, we programmatically tracked the employee counts of 150 private SaaS SaaS startups from Series A to Series C in other industries. each other for more than 24 months.

Here are the highlights of our research:

Companies are reducing headcount growth to widen runways

Headcount has grown monthly over the past four months at an average rate of about 2% compared to the 10% we’ve seen previously. Additionally, the 25th percentile of startups shows a decrease in headcount, indicating that many companies are taking drastic measures to expand their runways.

For companies with strong balance sheets, strong advocates, and low product/market fit, now is the best time to hire key employees.

This is a dismal indicator as startups brace for additional macro headwinds and re-pricing events.

Another cut could happen early next year

If the macro environment does not improve, we can expect another wave of job cuts following the fourth-quarter board meeting of companies (usually in January or February).

Many companies will discuss their CY ’23 projections, and headcount is always a lever for runway expansion as it can account for up to 80% of a startup’s costs. Given that many companies have maintained their headcount, we can see them having to lay off employees to alleviate burnout.

Start recruiting more closely from May 2022

Private companies began to brake as early as May 2022, and many began to act in unison, as can be seen from the inter-regional velocities of tighter headcount, which were already compressed. a lot but is now stable.

Companies serving human resources and procurement fell the most

As these services have shrunk across the industry, companies that provide technology aimed at HR and procurement professionals have seen the biggest drop in headcount growth. However, all customer profiles tracked tended to reduce recruitment efforts.

There’s a lot of talent available

On a positive note, this is a great time for companies with the right product to market (and supporting investors) to hire the right talent, as big tech is reducing headcount. and the market is flooded with exceptional talent.

From growing the number of active employees to staying the same

Until April, most companies were hiring heavily, with headcount growing monthly at more than 10% and the 75th percentile at almost 20%.

In contrast, the current mean is +1% and the 75th percentile is +4%.

This downtrend started in May and continues today. The interregional scope continues to shrink, with the final average moving towards fixed headcount (i.e. replacing natural attrition but not hiring beyond that). The 25th percentile fell into layoff territory around August, but both the 10th percentile and the 25th percentile have retreated since.

Image credits: Eddie Ackerman

Now we have the stage set up:


News5h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button