2022 saw industry-wide layoffs across the globe. Many were simply asked to leave, while some companies offered severance pay before asking employees to leave. The spate of layoffs continued throughout the second half of last year. So, we thought a deeper look at the great tech layoffs made perfect sense.
Great Tech Layoffs -The Story
Companies drove more than 1,50,000 tech professionals to leave their once-secure and well-paying jobs between the end of 2022 and the beginning of 2023. In addition, the tech industry, typically known for its stability and prosperity, has been hit hard by a broader economic downturn. This has led to great tech layoffs, with employees scrambling to secure new positions.
Here’s a rundown of some of the significant cuts in the tech industry thus far, with all numbers based on filings, public statements, and media reports:
Google’s parent company Alphabet announced plans to lay off 12,000 employees. CEO Sundar Pichai stated that the process would begin in the US immediately and take longer in other countries due to local laws and practices. The move comes after Alphabet’s first significant layoff in January, cutting around 240 employees from Verily’s health sciences division.
Microsoft reportedly laid off approximately 10,000 employees and announced a $10 billion investment in OpenAI, creators of ChatGPT. The investment, amounting to $1 million per laid-off employee, suggests a business motive behind the move.
Amazon CEO Andy Jassy announced that the company would lay off over 18,000 employees, mainly in the HR and stores divisions, following reports in November 2022 that it was seeking staff cuts of around 10,000. Amazon’s workforce grew from 798,000 in Q4 2019 to over 1.6 million employees worldwide by the end of 2021 due to the COVID-19 pandemic.
In November 2022, Facebook parent company Meta announced it would cut over 11,000 jobs, 13% of its workforce, following disappointing Q4 2022 guidance. It is the most significant round of layoffs the company has ever had, despite expanding headcount by 60% during the pandemic. In addition, the competition from TikTok, a slowdown in online ad spending, and Apple’s iOS changes have affected the business.
Similarly, Elon Musk cut around 3,700 Twitter employees, half of the staff, after purchasing the company for $44 billion. In addition, following policy changes, several more employees have quit. Musk cited Twitter’s losses of $4 million per day as a reason for the layoffs.
Several companies have announced tech layoffs over the past few months. For example, Crypto.com, Coinbase, Salesforce, Lyft, Stripe, Shopify, Netflix, Snap, Robinhood, and Tesla have all reduced their workforce, citing various reasons, from market downturns to the impact of the pandemic.
Many jobs cut has ranged from hundreds to thousands, with some companies reducing their workforce by up to 23%. The tech layoffs have come in different forms. Some companies offer severance pay and health insurance to laid-off employees, while others charge billions of dollars to record headcount reductions.
The great tech layoffs indicate many companies’ economic challenges, signaling a hard time for the tech industry.
The Cause of The Great Tech Layoffs
The findings are related to the massive layoffs in the IT industry. While it is understandable that IT companies hired many individuals during the COVID-19 epidemic, the average term of a laid-off employee is roughly two years.
The typical degree of experience held by individuals laid off is 11.5 years, indicating that these layoffs affect more than junior workers. One explanation for this might be that employees with longer tenure tend to get paid more, making them a target for cost-cutting initiatives.
HR jobs and job functions were the most affected by layoffs, accounting for 28% of all layoffs. This might be due to corporations cutting back on recruiting or automation replacing some HR services.
According to 365 Data Science statistics, more than half of the laid-off employees (56%) were women. This is the reason for worry, as the tech sector has been working over the past decade to eliminate gender disparities in the area, particularly in technical and engineering roles.
This development may not bode well for potential female applicants. On the contrary, it adds to existing difficulties such as salary disparities, fewer prospects for advancement to senior positions, and a greater risk of being laid off.
The great tech layoffs have impacted many tech workers, with many firms announcing job losses due to the economic slump. The layoffs have affected employees of various job areas and experience levels, with HR being the most affected and longer-tenured staff more likely to be targeted. Given the continuous attempts to address gender gaps in the tech industry, the disproportionate impact on women is cause for worry. The layoffs reflect the economic issues that the tech industry is facing, as well as the difficult times ahead.
What do the US Tech Layoffs mean for India?
Recent mass layoffs in the US tech industry have affected around 30 to 40 percent of Indian IT professionals, prompting them to consider staying in India for work. The layoffs may also impact future generations of Indians who aspire to work in the US. To avoid brain drain, the Indian government must create better employment opportunities for its educated youth, especially women, to retain the best talents in the country.
Will there be more tech layoffs?
As per data from Layoffs, a website tracking tech layoffs since March 2020, 297 tech companies have laid off almost 95,000 workers since the beginning of the year, as reported by USAtoday.com. If this trend continues, the tech industry may eliminate over 900,000 jobs by the end of 2023.
What strategies might tech companies adopt instead of focusing solely on growth?
Tech firms may hesitate to attract new customers as their services may already be widely adopted. Therefore, they may shift their focus towards diversifying their offerings or expanding globally.
What is the tech industry’s impact on the economy and stock market?
The performance of tech stocks impacts the stock market and local economies. Tech is a bellwether for corporate decisions, and labor shortages remain a significant challenge. While the tech industry’s layoffs may not affect the broader economy, individuals’ investment and retirement plans can be negatively affected.