Did you hear about the Silicon Valley big tech bubble burst? It has become a global issue, impacting a significant portion of the world population. In 2022, tech companies laid off over 350,000 employees globally, including 25,000 in India. The workforce reduction began with the biggest names in tech: Twitter, Google, Meta, Alphabet, Amazon, Yahoo, Zoom, and Microsoft, followed by many more big ventures. Now, the conditions have worsened- startups have also declared layoffs across all sectors, from tech firms to enterprise SaaS, and crypto- 77,000 workers have been affected in 2023.
But why are these massive layoffs happening and at such a fast pace? The main reason (accepted by CEOs of tech giants) is over-hiring during the lockdown phase. While offline businesses suffered huge losses during the outbreak of the novel coronavirus, tech companies over-hired employees due to heavy demand as more people switched to online platforms.
Google, for instance, acted fast and secured changes overnight to Google Meet to add more participants as professionals worked from home. The rapid changes in other similar platforms raised the demand for manpower, including developers, coders, UI/UX designers, and account managers, accelerating hiring. Since then, tech has matured and rapid changes are not required. Hence, organisations are trying to cut down their headcount.
“We hired for a different economic reality than the one we face today,” Alphabet’s CEO, Sundar Pichai was quoted as saying.
Another reason is cost-cutting and declining revenue and profits, forcing companies to cut costs by laying off employees. Google laid off employees to cut costs and focus on lucrative, high-priority ventures. Meta fired workers after its investments didn’t pay off as expected. A report in The Hindu says analysts anticipate that the five big technology companies will report disappointing profits from October to December 2022.
“Today I’m sharing some of the most difficult changes we’ve made in Meta’s history. I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1,” Meta’s CEO Mark Zuckerberg said when he laid off employees in 2022.
The maturing of the tech sector after hypergrowth over the last three decades is another reason for the job cuts.
The worst is not over yet. Meta has announced it will let go of thousands of employees in April and May this year. Accenture has said it will fire 18,000 people over 18 months. Amazon recently stated it is laying off 9000 more employees.
Other reasons for Massive layoffs in 2023 could include economic downturn and recession fears in the USA, pressure from investors, mergers and acquisitions, and job automation.
The economic downturn, triggered by factors such as rising inflation, political instability caused by the Russia-Ukraine war, or a global recession may cause job losses in 2023. The International Monetary Fund has warned of low GDP growth in 2022-2023 due to the pandemic and the ongoing Russia-Ukraine conflict.
Mergers and acquisitions may also contribute to job losses this year since they often result in redundancies as the new entity looks to streamline its operations and eliminate duplicate roles. In such cases, employees can reapply for their positions or be offered a severance package.
The increasing automation of jobs is another factor that could contribute to firings. As technology advances, companies may replace human workers with machines that can perform tasks more efficiently and at a lower cost. The trend can impact many industries, from manufacturing to finance and healthcare.
This dark storm can affect millions of live. The impact of massive layoffs in 2023 on the workforce could be severe. Those who lose their jobs may struggle to find new employment, particularly if the layoffs are widespread across different industries. The loss of income and benefits can also impact the affected employees and their families.
While the exact reasons for massive layoffs in 2022-2023 may vary, they are likely to have far-reaching implications for the economy and the workforce. Understanding these potential causes and their impact can help employees and job seekers prepare for the challenges ahead.
