Tech Layoffs exceed Great Recession level, set to worsen in early 2023
Businesses all across the world are using layoff campaigns to restructure their operations and cut back on their workforces as the Covid bubble bursts. In the software sector, in particular, there are a lot of layoffs. Since November of last year, about 200,000 IT workers have lost their jobs, setting new records at firms like Google, Microsoft, Facebook, and Amazon. The major layoffs by the tech companies last year alone have surpassed the levels from the Great Recession the world went through 2008-2009 that began with Lehman Brothers collapse, set to get worse in early 2023. These tech behemoths have started substantially reducing their workforces, a few thousand at a time, in the face of deteriorating economic conditions and a deepening recession. Discussions about the precarity of computer workers have been sparked by the scale and impersonality of the layoffs.
While the technology industry remains the hardest hit, other industries have also announced sizable layoffs. Since Jan. 1, legions of employees have been placed on the chopping block at Amazon (18,000 layoffs), Microsoft (10,000 layoffs), Salesforce (8,000 layoffs), Google (12,000layoffs), Spotify (400), Vimeo (1219 layoffs), Goldman Sachs (3200 layoffs), Blackrock (500 layoffs), Coinbase (950 layoffs) etc. The personnel cutback has had an especially negative impact on non-technical tech workers, or individuals who don't write code or have other engineering abilities.
More layoffs will occur this year, both inside and beyond the tech industry. The beginning of Cisco Systems' restricting plan, which would affect 5% of its workforce, has been announced. HP Inc. announced that it would axe up to 6,000 employees over the following three years due to falling revenues. Twitter will carry on the trend, having previously experienced a wave of major layoffs the year before. According to Seagate Technology, it is eliminating around 3,000 positions. Most of the key divisions at Goldman Sachs will be impacted, but the investment banking division is likely to be the focus of the layoffs. Hundreds of jobs would undoubtedly be lost in its consumer sector, which is losing money. As part of a significant reorganisation, fast-food behemoth McDonald's also intends to eliminate positions. There will be layoffs at Stitch Fix, a San Francisco-based online clothing firm; over one fifth of its salaried staff members will be let go.
According to experts, the COVID-19 pandemic is the main cause of this. They explain that as life moved online in 2020 and people went into quarantine, businesses hired a tonne of workers. These businesses must adjust their headcount and workforce as normalcy returns to the world. There are additional pandemic-related factors at work as well. Additionally, businesses found it challenging to evaluate employee performance and may have delayed staff reductions as a result. Leadership is now taking into account the cuts it might have previously resisted as more businesses return to the workplace, albeit only part-time. Another factor influencing the huge layoffs is the conflict between Russia and Ukraine. As of Day 320 of the war, there has been a significant global economic downturn. Supply chains were broken, interest rates and gasoline prices increased, inflationary pressures accelerated, and a global crisis was looming. Businesses realised that recently hired personnel were proving to be costly. Companies are being forced to restructure and reduce expenses due to the prospect of a recession and weak growth.
Indian IT services companies will inevitably be influenced by any changes in the global economy because they are among the largest employers in the organised sector. Management closely examines employee levels when attempting to cut costs and preserve profit margins because they are accountable to investors. There isn't yet a definite trend, but there are a few signs that could hint to what to expect in the upcoming few months.
Most layoff news comes from the EDtech, or educational technology, industry in the Indian startup scene. One possibility is that once the pandemic ended, fewer internet users visited websites with educational content. The Indian start-up layoff tracker by Inc42 found that more than 15,700 employees were fired in 2022 due to the tighter funding circumstances. According to Inc42, names like Byju's, Chargebee, Cars24, Ola, Innovaccer, Udaan, Unacademy, and Vedantu have been mentioned in the news for layoffs. The tracker showed that in 2022, 14 start-ups in the edtech sector fired 6,900 staff, which was the highest number of layoffs.
Many tech workers have had to reconsider their careers as a result of the industry slump because they are no longer enjoying the ardent attention of a sector that is keen to attract the finest and brightest individuals. Despite unionisation, the tech sector's perception as a secure job market is questioned due to the significant downsizing and impending recession, which reinforce the industry's uncertain future. As a result, if 2022 was poor, 2023 doesn't seem any better. What will occur if a global recession begins? We can only hope that the dreaded pink slip won't appear soon.