Facing an uncertain global economy and slowing revenue growth, the tech industry across the globe has so far recorded a significant amount of layoffs in 2023.
According to data compiled by Layoffs. fyi, the online tracker keeping tabs on job losses in the technology sector, 1,069 tech companies have laid off about 244,342 staff so far this year, compared to 164,411 total layoffs last year.
Even though the year is not yet over, layoffs this year have outpaced that of last year as tech giant companies such as Meta, Amazon, LinkedIn, Google, Salesforce, IBM, Microsoft, PayPal, Intel, eBay, Zoom, as well as many smaller tech companies have announced job cuts.
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Lately, there has been a contagion effect ravaging the once impenetrable tech sector as it has continued to record more job losses. In the UK, more than half of tech workers are reportedly applying for new roles in anticipation of being laid off.
The reason for workforce reductions follows a common script such as macroeconomic environment, cost-cutting plans, and restructuring while on a tumultuous path to profitability.
Continuing supply chain issues, inflation, are also having an impact on both business and consumer spending, leading to fears of recession.
According to industry insiders, they highlighted three key arguments for tech companies laying off employees.
Firstly, they noted that tech companies are undergoing a course correction after a period of over-hiring and endless optimism about market conditions.
It would be recalled that during the lockdown period, Tech companies saw record-high profits, as a result of this increase in online activity, it sparked a hiring frenzy to meet the rising demand.
For example, Meta nearly doubled its employee headcount during that period. This year, they announced they would be laying off nearly 11,000 employees. With people now reverting to their normal routines, there is a lower demand for tech services, and the need for these new hires also decreased.
Secondly, they stated that the prospect of an economic downturn provides cover for tech companies to reorganize without denting their reputations catastrophically.
Thirdly, they disclosed that the direction of innovation and the emergence of tools such as generative Artificial intelligence (AI) have sparked tech companies to question the skill sets of workers.
A small but growing number of tech firms have cited AI as a reason for laying off workers and rethinking new hires in recent months.
IBM CEO Arvind Krishna said in an interview with Bloomberg in May that the company expects to pause hiring for roles it thinks could be replaced with AI in the coming years.
Also in late April, file-storage service Dropbox said that it was cutting about 16% of its workforce, or about 500 people, also citing AI.
While there seems to be no substantial evidence that layoffs can be the magic cure for all the woes of tech companies this period, it has become the short-term go-to strategy.
Experts believe that there may yet be further layoffs in the near future, but noted that such predictions should not spell out doom and gloom for those aspiring techies.
Even though there may be predictions of tough times ahead, tech professionals are encouraged to use this time to continue to upskill themselves and stay the course, regardless of incessant layoffs in the tech industry.