The Scoop #25: A chilly market continuing to cool
Amazon slowing hiring and Booking.com rescinding offers in some countries. Also: why is there an uptick in layoffs?
The Scoop is a bonus series covering insights, patterns, and trends I observe and hear about within Big Tech and at high growth startups. Have a scoop to share? Send me a message! I treat all such messages as anonymous.
The Scoop sometimes delivers firsthand, original reportage. I’m adding an ‘Exclusive’ label to news that features original reporting direct from my sources, as distinct from analysis, opinion, and reaction to events. Of course, I also analyze what’s happening in the tech industry, citing other media sources and quoting them as I dive into trends I observe. These sections do not carry the ‘Exclusive’ mark.
Today's topics are as follows:
Booking.com rescinding offers in Europe for software engineers located in certain countries. The company is no longer for its Amsterdam office hiring from US-sanctioned countries Iran, Cuba, Syria and some of Ukraine. What is the reason and can we expect more companies outside the US to follow? Exclusive.
Amazon to slow hiring. The penultimate Big Tech company that did not change its hiring strategy is starting to tap on the brakes. Why has the company decided to slow hiring? Some additional details and analysis. Analysis.
Layoffs executed in a considerate way. While Twilio and Patreon both let people go, both companies have demonstrated what a well-executed process looks like. Analysis.
Why does there seem to be an uptick in layoffs? Checkout.com, Twilio, Patreon, Rent the Runway, Bitrise and Pitch let people go this week. But why does there seem to be a bump in the number of layoffs the past two weeks? Analysis.
Layoffs are not the real problem; hiring freezes are. Nnamdi Iregbulem, a partner at Lightspeed Ventures, shares his thoughts on how it’s not the headline-grabbing layoffs that we should focus on when assessing the health of the tech hiring market, but rather the things that rarely get headlines: when hiring slows or stops. Opinion.
Tongue-in-cheek: Zenly employees build their own Talent Hub. Snap is letting go of the whole Zenly division but doesn’t allow these people to list themselves on the Snap Talent Hub. Zenly employees took action and built a better one for themselves. Exclusive.
1. Booking.com rescinding offers in Europe for software engineers located in certain countries
Note: this first story was un-paywalled a month after publication, on 12 October 2022, thanks to the broader interest this topic received. Become a subscriber to receive exclusive stories and in-depth analyses like this relevant for those working in big tech and high-growth startups.
I talked with several software engineers who have had their offers rescinded from Booking.com, including a relocation offer to Amsterdam. The move came, in some cases, months after they signed their employment contract. All these people have handed in notice at their current workplace. Some of them were in the process of selling property they owned.
The common theme? All of these software engineers were residing in Iran or Syria.
Booking.com has rescinded all signed offers extended to employees residing in 6 countries/regions. These are Iran, Syria, Crimea (region), Donetsk or Luhansk (region), Cuba or North Korea.
The move appears curious because Booking.com has been hiring from these countries before - most notably from Iran. While the US has extensive sanctions in place with Iran, Booking.com was allowed to hire thanks to not being an American company. Booking.com B.V. is a Dutch entity, headquartered in Amsterdam.
Now, the parent company of Booking.com is American: Booking Holdings. However, it is possible for a non-US subsidiary to hire employees from a US-sanctioned country. It does take more administration, and things do get more complicated in how to do this. As per the US export control restrictions:
“The State Department's International Traffic in Arms Regulations (ITAR) and the Commerce Department's Export Administration Regulations (EAR) prohibit disclosing controlled technical information* to a foreign person without proper export authorization. Disclosure includes any simple verbal or visual access to that information. A foreign person is defined as anyone who is not a U.S. citizen, a U.S. lawful permanent resident, or a refugee or asylee protected under U.S. law. For that reason, an employer is required to obtain proper export control authorization for foreign persons to access controlled technical information.”
Note that the above paragraph says nothing about US sanctions. In practice, some companies have gone down the route of applying for ‘export control’ authorization for software engineers hired into a non-US subsidiary, from a US-sanctioned country.
Booking.com changed its guidance on hiring practices, putting a ban in place for employees located in 6 countries: Iran, Syria, Crimea (region), Donetsk or Luhansk (region), Cuba or North Korea. According to an internal document I reviewed - which document was marked as “strictly confidential” - this guidance is effective from August 30, 2022.
The rationale Booking.com makes in this document on this change is how the EU, the UK and the US maintain economic sanctions on specific countries, governments and individuals. The document makes the case that some sanctions are comprehensive - like the US one on Iran, while some are selective - like EU sanctions related to Russia. The document makes the case that hiring a particular employee could create a sanctions risk for the company.
Iranian employees within Booking.com in Amsterdam are upset and are speaking up. Of all the regions to no longer hire from, the most sensitive one for Booking.com is Iran. This is because the company has historically hired and relocated plenty of employees - mostly software engineers - from this country.
These employees are especially upset at two things:
How signed offers have been rescinded, having a significant impact on people uprooting their lives;
How the policy is not communicated in public. Some recruiters and hiring managers at Booking.com are not even aware of this policy.
My take is that Booking.com needs to ensure it operates in line with international regulations, and follows sanctions imposed by countries it is governed by. I would find it acceptable to change these processes going forward. I would also find it acceptable to rescind offers and compensate people.
However, compensating people residing in US-sanctioned countries might not be possible, thanks to the ban on conducting economic transactions with them. And the swift rescinding of the offers, and doing all of this in secrecy, might indicate that the legal team at Booking.com might have concluded that the company could be operating in risky territory, and rescinding offers was the safest option to keep the company compliant.
Booking.com can still hire citizens of US-sanctioned countries who do not reside in those countries. I confirmed with a hiring manager that the company has recently gone ahead and hired a software engineer with an Iranian passport but residing in the Netherlands.
From the document I reviewed, it was also clear that the ban is for those currently residing in the sanctioned countries, and is not based on citizenship.
I reached out for comment to Booking.com and a spokesperson from the company confirmed the details, and claimed that they have been and will be in touch with the individuals impacted:
“We have regrettably had to withdraw a small number of offers due to some complexities we uncovered in our international hiring process. In regards to these cases, we unfortunately encountered challenges in the process - including mobility vendors unable to effect the necessary part of the hiring and relocation process, but we have been and will continue to be in touch with the individuals impacted as we work to understand what we can do.
This is not a practice of discrimination against any individuals. We are incredibly proud of our very diverse workforce and the many Iranian employees who contribute to the fabric of our company.”
Update on 15 Oct: Booking seems to have not told the truth in their statement. While the company wrote “We have been and will continue to be in touch with the individuals impacted”, this turned out to be the opposite.
On 13 October, reporter Stijn Bronzwaer published an investigation in Dutch national newspaper NRC, where he talked with 11 Iranian tech workers whose offers were rescinded. These people did not get reachouts from Booking, beyond the email telling them their offer is taken back. Several of them tried to contact the company, but silence was their answer. The situation only changed after a social media post from one of these people went viral in October, gathering 25,000+ likes and large outrage.
I reached out to Booking, asking them to explain why they misled the press about being in touch with impacted people. 2 days later, the company has yet to respond. I’ll update the article when they do.
The example of Booking.com shows how increasingly challenging it is for global companies to navigate a growing number of sanctions. No company or hiring manager wants to discriminate based on citizenship or where potential employees are located. However, no company can ignore the legal obligations the country they are incorporated in. In the case of Booking.com, while the company is a Dutch company, meaning it has to comply with legal obligations from the Netherlands and the European Union, it also has a US parent company - needing to comply with some US legal obligations - and a UK subsidiary - meaning some UK legal obligations might apply.
Sadly, the safest option for any global company spanning across Europe and the US is to refuse to do business - or hire from - any of the countries that are on the sanctions list. This is increasingly bad news for software engineers residing in these countries. At the same time, it’s an opportunity for smaller companies incorporated in Europe to hire and relocate some of these potential employees. After all, there must have been a reason that Booking.com was heavily sourcing tech talent from Iran for many years.