As inflation continues to bite hard, ravaging the global economy, job cuts and hiring slowdowns were big talking points in the tech sector as of July last month. According to the latest data from the U.S department of labor, unemployment claims hit an unexpected 8-month high.
Big tech companies like Microsoft, Tesla, Twitter, and the likes, as well as several cryptocurrency exchanges and lending platforms, were not left out as there have been mass layoffs of employees, coupled with a freeze in hiring.
In India, more than 11,500 employees in the tech sector have been laid off this year. The layoffs were dominated by edtech platforms, ride-hailing platforms, and pre-owned car platforms.
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As the economy slows down, a large percentage of tech companies have warned their employees of corporate downsizing and possible layoffs. Several executives have been reported to have sent memos to their employees warning of job cuts ahead.
On Wall Street, stocks from tech companies fell as there are still predictions of more falls as inflation worsens. Employers in the tech sector in the United States cut nearly nine times more jobs in May than in the first four months of the year.
The significant growth witnessed in these companies in 2020, is beginning to see a decrease in revenue due to a slowdown of users caused by inflation. In the mass layoff of workers in the tech sector, fintech companies announced 268% more job cuts in May than in the first four months.
Recall that earlier this year, there was a bloodbath in the crypto market as cryptocurrencies crashed in one of the coldest dips the asset class has experienced in years.
The crash triggered American cryptocurrency company Coinbase to lay off nearly 20% of its employers. Last month, multinational automobile and clean energy company, Tesla laid off more than 200 of its employees. Micro-blogging platform Twitter, also laid off 30% of its acquisition team.
With the mass layoffs and a hiring freeze, tech workers have reported huge drops in confidence in job security. According to a June survey from Blind, it disclosed that just 9% of tech workers are feeling confident in their job security.
Mass layoffs are making tech workers panic, especially those in e-commerce, real estate, and businesses tied closely to the stock market. This rise in inflation has brought about wage inflation in the tech sector, which is putting pressure on tech companies to boost compensation for key roles by 20% or more as they compete for a limited pool of workers.
Big Tech companies are poaching one another’s workers, allowing people with in-demand skills like programming and data science to offer their talent for a premium.
In fact, even laid-off workers from top companies are quickly snatched by rival firms. The number of technologists who feel more confident about job security is notably low.