What layoffs mean for a tech industry that already lacks diversity

Sixty-eight percent of the demographic makeup in big tech is white, according to the U.S. Equal Employment Opportunity Commission (EEOC). And men in the sector make up around 64% of the industry. 

Diversity, equity and inclusion are by no means new problems for the tech industry. However, new issues like the economic downturn can lead companies to take measures like layoffs — which can worsen an already glaring diversity problem across the industry. 

Even among the most diverse companies in tech — Twitter, Microsoft, Zoom and Cisco — three of the four have had to cut staff this fall. Twitter, specifically, laid off 90% of its staff abroad in India. What exactly do measures like that do to diversity? 

“Typically, in tech companies, the people that struggle to move up or get recognized are the minority, who are the people that typically get cut first,” said  Kamales Lardi, chair of the Forbes Business Council for Women Executives, digital transformation and technology expert, and author of The Human Side of Digital Business Transformation.  

Companies like Twitter making these decisions will miss out “on the critical perspectives and innovations inherent in having a diverse workforce, undermining the importance of supporting diversity and inclusivity in tech,” she added. 

Diversity’s impact on digital transformation

Lardi’s 22 years of industry experience led her to join Valtech, a digital agency that focuses on business transformation solutions, this past June as the managing director of Switzerland. As a long-time advocate for diversity in the workplace, especially in the tech sector, Lardi has some major concerns looking ahead to 2023. 

“There are several elements that I worry about regarding the mass layoffs that is currently occurring. Loss of diversity in the tech space has significant consequences for the world. Development in major technology areas, such as AI-based solutions or the metaverse, already suffer from a lack of diversity,” she said. “If these solutions are not built by a diverse set of people, they risk being designed only for a specific homogenous subset of people.”

Mitigating-bias in technology, Lardi explains, goes beyond gender and race and expands to diversity of thought, upbringing, sexual orientation and educational backgrounds. Without that, she says, teams face the consequence of likely developing technology with bias ingrained into it. 

 “The lack of diversity in technology and developer teams have been well-documented,” Lardi said. “This lack of diversity translates directly into the technology solutions that are being developed. “

When companies move through any phase of their digital transformation strategy, they often focus on the “digital,” rather than the “transformation,” Lardi says. The “transformation” layer is the one that directly involves the people within an organization. So, lacking diversity, as a result, impacts these efforts as well. 

“The digital part opens doors to exponential possibilities,” she said, “but it is the transformation part, the journey that an organization goes through with the ecosystem of people, that creates the solid foundation to accelerate these exponential possibilities. The people element can make or break any strategy or technology implementation.”

The human factor in digital transformation is something the enterprise is still struggling to understand, she said. Engaging with the ecosystem of people within an organization that is working toward digital transformation, she believes, is key to long-term success. 

Lardi suggests decision-makers create a framework that allows for management of internal and external stakeholders as well as suppliers, and to identify and develop shared benefits throughout the process. In her book, she outlines digital maturity and transformation readiness assessments that organizations can look to as a tool while navigating this process.

No excuses for diversity issues

While the economic climate for the tech sector may not be favorable at the moment, one thing is likely to endure: Its potential for growth. This is something the U.S. EEOC has paid close attention to because it identifies the tech industry as a source of increasing numbers of jobs when the economy does not strain it. For that same reason, the EEOC is invested in the diversity, or lack thereof, in the industry as well. 

“Ensuring a sufficient supply of workers with the appropriate skills and credentials and addressing the lack of diversity among high tech workers have become central public policy concerns,” an EEOC executive summary on diversity reads.

Lardi notes that while tech companies face financial challenges in the coming months, their digital transformation and diversity strategies, have no excuse to fall behind.  

“As economic conditions shift, business leadership may decide to shift investments and conserve resources for business continuity,” she said. “Here, focusing on digital transformation solutions that support cost reduction — like cloud migrations or automation, enhancements of products or services through digital channels or technologies or optimizing operations with remote/hybrid working tools would be advantageous,”

In addition, as more individuals from Gen-Z enter the workforce, they’re also keeping companies on their toes and demanding corporate responsibility, clear diversity and inclusion strategies, sustainable practices and work that fulfills them — which is why the tech industry can’t make excuses for its laggard progress in these areas any longer, Lardi explained.

“This is translating heavily into the tech community, as people are increasing demanding for companies to be responsible and represent the values that are important to them,” Lardi said. “This will play a role in holding a mirror up to tech companies.”