Cybersecurity firms Snyk and Cybereason separately announced major layoffs in the last week of October, cutting their workforces by 198 and 200 workers and accounting for 14% and 17% of their workforce, respectively.
The two companies are the latest cybersecurity vendors to join a growing list of more than three dozen companies to downsize over the past six months as the global economy continues to show signs of a slowdown and possible recession. . On October 24, for example, Snyk CEO Peter McKay announced that while the developer security company continues to grow, the company “needs to operate even more efficiently for Snyk to be able to effectively withstand the continued headwinds that the global economy is facing”.
Cybereason CEO and co-founder Lior Div also claimed strong operations, but stressed his need to move away from aggressive investments in research and development, sales and marketing and instead focus on the customer retention and innovation in its core extended detection and response (XDR) market.
“While we are making significant traction in these areas and our growth remains strong, we are seeing significant volatility in global financial markets that forces us to prioritize profitability over growth,” he said. he stated in a blog post on October 26.
Snyk and Cybereason are not alone. In June, privacy and security firm OneTrust announced it would lay off 950 employees, or 25% of its workforce. At the end of May, cloud security company Lacework announced that it would lay off around 300 workers, or 20% of its workforce. Last week, cybersecurity automation company Forescout announced it would cut costs but did not release the specific number of layoffs, instead saying the company intended to “optimize our cost base to prepare for tough economic times over the of the next period to ensure future success”.
A total of 32 cybersecurity firms have announced layoffs or restructuring since early May, according to layoff tracking site Layoffs.FYI, with most citing the tightening market and the need to protect the company’s longevity.
“While we do not have control of the environment around us, we do have a responsibility to control how we operate our business and to make the changes necessary to best position the business for continued success and long-term”, Jay Parikh, CEO of Lacework, said in a May update. “We have adjusted our plan to increase our cash trail to profitability and significantly strengthened our balance sheet so that we can be more opportunistic in the face of investment opportunities and climate uncertainty in the macro environment.”
Investments are scarce
The retreat of cybersecurity providers is not without cause. The vast majority (83%) of businesses expect to face a recession in 2023, and most of these businesses are taking steps to prepare, according to the “2023 State of IT” report. IT budgets are likely to stagnate: While half of companies (51%) expect to increase their IT budgets in 2023, a significant portion of those increases are due to inflation, not increased purchases and services, the report says.
Investments are also drying up, leaving startups more reliant on their actual cash flow to fuel future operations. Venture capital funding totaled $3.1 billion in the third quarter of 2022, compared to $7.9 billion for the same quarter in 2021, according to cybersecurity-focused venture capital firm Momentum Cyber.
“That’s when investors can be much more mindful of valuations, because if they feel like the broader economy is slowing down, they might not want to take that bet risk. market,” Eric McAlpine, managing partner at Momentum Cyber, stated in the company’s “Cybersecurity Market Review Q3 2022” report.
It must be said that not all companies say that the layoffs are the result of economic realities. In August, for example, the security software company Malwarebytes reportedly laid off at least 125 employees, or around 14% of its global workforce, keeping the company was not trying to achieve profitability but to switch to a different strategy. A month later, Malwarebytes announced a $100 million investment and a strategic shift into the managed detection and response (MDR) market.
Yet for the most part, companies seem to be hunkering down, cutting spending and making sure they can survive as long as possible if market conditions deteriorate. Privacy and security firm OneTrust, for example, cited a potentially weak economy as the reason for its downsizing.
“My responsibility is to ensure that OneTrust thrives and is positioned for sustained growth, and unfortunately, downsizing and adjusting to capital markets sentiment is what is needed to keep us in our leadership position,” said Kabir Barday, CEO of the company, said in a blog post.
Cybersecurity jobs remain strong
While some cybersecurity vendors are downsizing, overall the job market for cyber professionals remains strong – a good sign for workers who have been laid off. Companies continue to seek cybersecurity experts as the workforce grew 6% to 1.34 million in North America in the past 12 months, according to (ISC)2professional cybersecurity organization.
And job postings for tech jobs in general on the Indeed.com job board soared 49% above the pre-pandemic baseline as of Oct. 21.
During this time, tThe continuing shortage of cybersecurity workers and the growing adoption of cloud services will allow more organizations to acquire their cybersecurity expertise as a service. (ISC)2 expects greater adoption, especially by small businesses, who don’t have the need or the budget to fund a permanent on-site team.
“We have seen a greater demand for cybersecurity skills to defend, protect and secure our personal data trail as threats become more complex and our digital footprint continues to grow,” said Clar Rosso, CEO of ( SAI)2urging organizations not to let their collective guard down.
“As organizations face increasing economic pressures, I encourage them to continue prioritizing their cybersecurity needs,” Rosso says. “Bad actors and exploits won’t go away if the economy deteriorates; in fact, you could say the threat landscape worsens during tough times.”