Nowadays, instead of innovations and gadgets, tech company news is overtopped by the layoffs that the industry has been practicing. Since the last year, more than 70,000 people globally have been laid off by Big Tech companies.
This layoff figure (70,000) does not include the long-term impact on contractors and other organizations who are on the verge of failing business as the budget shrinks.
However, people are still wondering about what exactly led to this huge modification. What does it mean for the industry and people?
As the COVID-19 pandemic is coming to an end, so are the careers of thousands of tech employees. A large number of employees have been unwaged from major tech companies which include Amazon ( cutting around 8,000 jobs regularly), Alphabet (firing 12,000 employees), Meta (11,000 employees), Salesforce (8,000 employees), and Twitter (4,000 employees).
Tech house Microsoft has not released their exact number of fired employees but as per the latest reports this number goes up to 1000 members from branches from around the world.
Some other popular names include Netflix, Tesla, Robin Hood, Coinbase, Spotify, and Snap. However, layoffs by these companies are considerably less than those mentioned above. Even many IT companies like Infosys, Intel, Tech Mahindra etc, are planning to let go their employees.
Above all, these estimates do not include long-term layoffs, like the effect of advertising agencies firing their employees as advertisement spending is falling. Another example can be taken from manufacturers who are downsizing as tech product orders are shrinking. Many potential layoffs are yet to come.
Many employees are voluntarily leaving their jobs. This is mainly because they don’t want to enter their office and hate their seniors, for example, employees are not very pleased by Elon Musk’s “hardcore work” philosophy.
This chain of effects has affected the marketing, consulting, manufacturing, and advertising industries as companies are reducing their expenditure, and redirecting it towards innovating in Artificial Intelligence (AI).
So what is motivating the layoffs?
Advertising revenue has decreased since last year because of fears over a global recession prompted by the COVID-19 pandemic. Many tech houses are compensated through advertising. Hence till the time that income stream was good, especially during the years leading up to COVID-19, the expenditure on staffing was also well enough.
As advertising revenue fell last year, due to fears of a global recession brought about by the pandemic, it was unavoidable that layoffs would follow.
Apple, however, has been an exception. It firmly abstained from increasing the employee headcount in recent years. Due to this policy, they do not have to fire staff numbers, even though it hasn’t been immune to staff losses because of work-from-home policy changes.
How will it affect the consumers?
The news headlines can be scary for most people, but the layoffs would not impact consumers on a large level. This is because the work on tech products and services is still expanding at a fast pace.
When people thought that Twitter will be in ruins by now, it is thinking about expanding its branches of revenue.
However, some new projects like Metaverse by Mark Zuckerberg may not develop further the way their leaders had initially thought. This is because of the fact that many team members who had an accurate vision of the project are now fired by their senior leaders.
Not only Metaverse but the innovations in firms like Microsoft and Amazon have been affected at a large scale due to these layoffs.
In the past few years, low-interest rates along with high COVID-related consumption gave these head members the confidence and assurance to invest in innovative projects. Other than in Artificial Intelligence (AI), that investment rate is now slowing down, and in many cases, it is already dead.
What about the people who lost their jobs?
Layoffs can be terrifying for the individuals affected. To a large extent, the people losing their employees are highly educated professionals. They were being provided with service packages and support that often surpassed the minimum legal requirements.
For individuals like these who have worked for such big tech houses, it will surely be hard as of now but it will also be a real advantage in the future competitive employment market.
What does this mean for the industry?
Later when experienced tech professionals will look for jobs once again, salaries will likely deflate. Also, higher levels of work experience and education will be needed to secure jobs and be immune.
The recent layoffs are attention-grabbing, but this will not affect the overall economic development much. Even if Big Tech companies fired around 100,000 employees, it would still be a small fraction of the tech workforce.
The numbers reported may seem much large, but they’re often not reported as a proportion of overall wage spent. For some tech companies, they are just a small part of the massive amount of new recruitments initially attained during the pandemic.
