After Meta’s ‘year of efficiency,’ industry leaders root for year of innovation

It's been over a year since Mark Zuckerberg shared a letter with Meta employees about a "year of efficiency" in which the company would prioritize "flattening our orgs, canceling lower priority projects, and reducing our hiring rates."

That phase is now over for Meta, and Zuckerberg's recent talk on earnings day last month about increased spending on money-losing ventures, like new generative AI models and virtual reality, spooked investors.

But tech companies, by and large, are still closely watching the expense line. IBM has committed to replacing workers with artificial intelligence and is continuing to trim its workforce. Google announced its latest layoffs on Wednesday. With many companies maintaining the "efficiency" mindset, and hiring for tech jobs remaining low, according to the iCIMS Insights April 2024 Workforce Report, innovation is at risk.

"We've seen less innovation on the whole with some of the Covid-era big spenders," said Ricardo Madan, senior vice president of global technology services at TEKsystems. "They're dealing with a whipsaw of that over-hiring that they've had to balance out."

Tech companies have to spend to stay ahead of competitive threats and protect markets. During Meta's earnings discussion, Zuckerberg told analysts, "I think it's worth calling that out, that we've historically seen a lot of volatility in our stock during this phase of our product playbook where we're investing in scaling a new product but aren't yet monetizing it."

Madan says companies tend to act based on fear of missing out, but this behavior can stall technological innovation. A TEKsystems report on the state of digital transformation found that 67% of leaders cite AI and machine learning as the biggest skills gap in their organization. With the amount of time it takes to adequately fill these gaps, Madan argues that maintaining a level head through shifting hiring trends is key.

Chris Duffey, head of strategic development for emerging solutions at Adobe, believes that fully embracing AI can combat this, particularly when used to assess more applicants and accelerate the selection and onboarding processes. Working with vetted strategic partners can help fill these acceleration gaps to streamline both top and bottom-line growth, he says.

Duffey says he lives in a world of innovation, both tangible and speculative, and he says the experts around him are largely in agreement that about a quarter of an IT budget should go towards emerging technologies such as generative AI. This investment will naturally alter the way we do work.

"I used to say proudly that I was a problem solver," said Duffey. "Now with gen AI, we're moving from being problem solvers to problem seekers." Duffey added that generative AI is "taking away those baseline tasks to give us more time to do this higher-level critical thinking and go out and find the problems, the hypotheses, and have gen AI help validate it, or poke some holes into it."

From products that help firms navigate customer service like the Google Cloud contact center AI platform to the future of large action models (LAMs) that personally assist individuals based on their unique data, like those offered by Salesforce, technological innovation is on a strong path. But to keep this going, leaders who choose to tap into workforce efficiency must do so mindfully rather than simply hopping on a bandwagon, Duffy and Madan said.

This process can be messy, which is why experts say any conversation centered around efficiency must also include innovation. "The great leaders that we see," said Madan, "are the ones that really balance that financial and cultural stewardship, and they don't fall prey to the over-speculation and the over-hiring. They balance that with keeping your best and brightest always working on the toughest problems across all the platforms."

Digital transformation is a core pillar of business strategy for 84% of technology and business leaders, according to the TEKsystems report. If the majority of leaders feel this way, it only makes sense their actions align with that. And it's not like the talent isn't available. Despite a competitive market, tech-related jobs continue to be in demand, with applications per opening up 45% year over year, according to the iCIMS report.

The U.S. added more than 300,000 new nonfarm jobs in March, according to the Bureau of Labor Statistics, mostly in healthcare, government and construction. These industries are part of the innovation matrix, too (every company is a tech company, many experts say, and even a range of governmental organizations have joined the trend of hiring a chief AI officer).

"I think we're getting out of that trough of disillusionment," Madan said about hiring trends. On the innovation front, he added, "The best organizations are the ones that synthesize human input with AI collaboration."