Tech layoffs have been causing disruptions for some time now. In 2023, big companies started laying off thousands of employees, and the trend continued into 2024. Google, a major player, began the year with layoffs across various departments, setting the tone for what was to come. Over the following months, many other tech companies followed suit, resulting in a staggering number of job losses.
The situation in 2024 doesn’t seem any better so far. While there was a slight decrease in layoffs compared to January, the overall economic uncertainty made the year look precarious for tech workers. The United States, being a tech hub, saw a lot of these layoffs, mostly due to economic instability and companies changing their plans to adapt to the times.
Even big names like Tesla, Amazon, Apple, and Byju’s weren't immune to these layoffs. Many companies blamed overhiring during the pandemic and changes in their strategies for the job cuts. According to Layoffs.fyi, the numbers were staggering. In 2024 alone, 235 companies let go of 57,785 employees. January saw 34,007 job losses across 121 companies, and February added another 15,379 to the tally. March brought some relief, but Dell's announcement of slashing 13,000 jobs served as a reminder of the ongoing uncertainty.
We spoke to Mitalee Dabral, Country HR Leader, Wayfair India about the dangerous trend of layoff in India and worldwide. She had a few insights to share.
Over the past few years, the global economic landscape has been heavily impacted by events such as the pandemic and ongoing conflicts, which have continually disrupted economic stability. This instability has undoubtedly influenced organisational decisions regarding workforce planning. Additionally, the rapid pace of technological change, particularly in sectors like tech, has created a demand for specialised skills such as AI, ML, and cybersecurity. Unfortunately, the talent pool with these skills isn't always readily available. It raises questions about the alignment between industry needs and the skills being taught in educational institutions. Are graduates equipped with the relevant skills needed in today's job market?
Mitalee emphasized on the importance of investing in talent readiness.
Investment in talent readiness is crucial, both from the perspective of educational institutions updating their curricula and organisations providing opportunities for self-growth and upskilling to their employees. Without adequate alignment and investment in talent development, the risk of redundancy increases over time. So, while overhiring may be a factor in some cases, it's essential to consider the broader context and address systemic issues contributing to workforce challenges.
Factors Driving Tech Layoffs
Internal Restructuring and Strategic Shifts: Many companies globally, including those in the US, are currently undergoing internal restructuring to realign their business priorities. This shift often involves the elimination of certain departments or projects, resulting in significant job cuts. For instance, German software giant SAP announced a restructuring plan affecting over 7% of its workforce, totaling 108,000 employees. Similarly, Expedia Group opted to lay off 1500 employees to streamline its cost structure and adapt to evolving market dynamics.
Economic Uncertainty: Widespread fears of a potential recession and fluctuations in tech stock prices have fueled economic uncertainty. Investor caution has prompted companies to adopt cost-conscious measures, including layoffs, to mitigate financial risks. Despite a decrease in layoffs between January and February, the future remains uncertain for tech companies and millions of employees worldwide. In 2023, Google made headlines with a substantial 12,000 job cuts, while SAP initiated a restructuring program resulting in 8,000 layoffs in January 2024. Additionally, in response to an uncertain business environment and sluggish demand in telecommunications, IT company Cisco announced layoffs affecting 5% of its workforce, approximately 4,250 employees. These figures highlight the ongoing turbulence within the tech industry and underscore the need for adaptive strategies to navigate future uncertainties effectively.
Focus on Financial Performance: Layoffs are often viewed as a strategic move to improve a company's financial performance by reducing payroll expenses. Companies striving to enhance profitability and increase investor favorability may resort to job cuts as a means to achieve these objectives. London-based luxury e-tailer Farfetch announced the layoff of 2000 staff members, citing the need to streamline operations and operate from a position of financial strength. Such actions aim to bolster profit margins and generate cash flow for investment in growth initiatives.
Understanding Additional Factors Behind Tech Layoffs
Overstaffing During the Pandemic: Amidst the pandemic, tech companies like Amazon and Meta experienced a surge in demand, prompting extensive hiring efforts. However, as economic conditions evolved and consumer behavior shifted, many organizations found themselves grappling with overstaffing issues. The realization that surplus staff had become redundant compelled these companies to make difficult decisions regarding workforce reduction.
Investor Pressure for Efficiency: In the aftermath of the post-pandemic surge, investors began emphasizing the need for greater efficiency within tech companies. This heightened pressure prompted organizations to reevaluate their operations and implement cost-cutting measures. As a result, widespread job cuts emerged as a prevalent strategy to align with investor expectations and enhance overall performance.
Impact of AI and Automation: The rapid advancement of AI-powered technologies has revolutionized various industries, including tech. While some companies openly attribute layoffs to automation, many refrain from explicit acknowledgment. The rise of AI has notably affected roles involving routine and repetitive tasks, leading to workforce reductions in certain areas. Although AI-related layoffs in February were relatively minor, the trend underscores a growing shift towards automation-driven efficiencies.
Your tech job just laid you off. Now what?
Make a graceful exit: Take a deep breath and acknowledge your feelings first. It's okay to feel a roller coaster of emotions. Practice self-compassion and mindfulness to navigate this challenging time. And do not blame yourself.
Tell everyone you need a job: Bid farewell to former colleagues and express gratitude for your time together. Connect on LinkedIn and seek endorsements to strengthen your professional network. Review any severance package with an employment lawyer before signing. Don't shy away from sharing your job search journey with your network. Update your resume, LinkedIn profile, and social media to reflect your availability. Seek recommendations and support from former colleagues and mentors.
Get money in the door (and learn something new): Use this time to refine existing skills or explore new ones. Consider contributing to open source projects or taking online courses to enhance your expertise. Freelancing or contracting can provide valuable experience and income during your job search.
Widen your job search: Utilize your existing contacts and explore job opportunities beyond traditional channels. Leverage your network to uncover potential openings and seek recommendations. Attend networking events and consider unconventional avenues for job hunting.
Understanding Severance Pay: Familiarize yourself with the basics of severance pay and review any agreements carefully. Severance pay is typically based on length of employment and is taxable. Consider consulting with an employment attorney to clarify terms and ensure fair compensation.
Navigating Layoffs with Confidence: While navigating a layoff can be daunting, approaching it with grace and resilience can lead to new opportunities and growth. Prioritize self-care, stay connected with your network, and explore avenues for skill development and job hunting.
What is the way forward?
As the tech industry confronts the realities of ongoing layoffs, it is imperative to prioritize the well-being of employees amidst turbulent times. While the road ahead may be fraught with challenges, embracing adaptability and resilience can pave the way for a brighter future. By rallying together to support those affected and advocating for sustainable solutions, we can navigate these stormy waters and emerge stronger as a community.