Contech firms feel the sting of tech industry woes

Dive Brief:

  • Despite signs the broader economy is improving, as the Associated Press reported, and seed capital still entering the sector, the storm that the tech industry weathered this year has not been kind to the sector, including contech firms.
  • Startup tracker Crunchbase’s layoff database paints a grim picture for the tech industry this year. As of July 24, U.S.-based tech companies laid off more than 155,589 workers in the space in 2023, with a little over four months to go in the year, compared to more than 93,000 tech layoffs throughout all of 2022. Contech firms that cut workers this year include Autodesk, Matterport and Built Technologies, according to the database.
  • Commerce giant Amazon led layoffs with 16,080 cuts, followed by tech conglomerate Alphabet, the parent company of Google, with 12,000 layoffs, and software stalwart Microsoft, which cut 11,158 jobs.

Dive Insight:

This year, a combination of a broader uncertain economy — brought on by the Covid-19 pandemic and the Russian invasion of Ukraine — and a flash-in-the-pan crisis triggered by the collapse of Silicon Valley Bank in March have battered contech firms.

While contech startups have continued to attract funding and seed capital, they are not isolated from the effects of the broader economy. 

RJ Pittman, CEO of Matterport, a firm that specializes in digital twins, wrote in a July 11 blog post that the firm was “reorganizing to streamline business operations.” The company laid off 30% of its total workforce, or 170 people, according to a Securities and Exchange Commission filing.

“In recent years, our ability to adapt to rapidly changing global market conditions has been vital to our continued success,” Pittman wrote in the blog.

That move came after design software giant Autodesk laid off 2% of its workforce, or about 250 people, in February. The company told Construction Dive the layoffs did not impact its Construction Solutions division, which includes the Autodesk Construction Cloud.

Construction fintech firm Built Technologies declined to comment on its layoffs, which were the company’s second round this year, according to the Nashville Post. The company cut 8% of its workforce in February.

The problems tech companies, including contech firms, grapple with lead back to their clients’ customers.

Amazon, for instance, has pulled back on its office construction, and delayed the groundbreaking of the second phase of HQ2, the company’s second U.S. headquarters located in Arlington, Virginia.

In construction, the flagging office sector continues to drag on the industry. The Dodge Momentum Index, a benchmark that measures nonresidential building planning, tumbled another 2.5% in June, its fourth consecutive fall. 

In addition to tech firms, some contractors have also laid off staff. 

Last week, Lendlease announced that it cut 10% of staff worldwide, or about 740 workers. 

In addition, Colorado Springs, Colorado, contractor Cusi Construction shut down operations in June, leaving 100 workers short on owed payments, according to local Colorado outlet Fox 21.

Comments are closed.