2024 Tech Layoffs: Causes, Impact, and the Road Ahead

The technology sector, once seen as untouchable, has witnessed an unprecedented wave of layoffs in 2024. Major tech companies such as Google, Salesforce, Cisco, and SAP have announced significant job cuts, signaling a shift in the industry's growth trajectory. While the layoffs aren't as severe as those experienced in 2022 and 2023, they are part of broader changes driven by economic uncertainty, AI advancements, and corporate restructuring.?

This post explores the causes behind these layoffs, the roles affected, the pros and cons of the situation, how companies and employees can avoid similar events in the future, and what trends to expect in hiring and demand for tech roles.

Causes of Tech Layoffs in 2024

1. One of the primary drivers of the tech layoffs is over-hiring during the pandemic. As companies scrambled to meet skyrocketing digital demand, they expanded their workforces rapidly. However, as the economy stabilizes, some of this demand has cooled, leaving businesses overstaffed. Bad news for tech employe
2. Another major cause is the rapid integration of artificial intelligence (AI). Many companies are restructuring to focus on AI, automation, and other emerging technologies. For example, Google has shifted focus toward AI development, cutting jobs in areas such as advertising. CEO Sundar Pichai noted that these layoffs were about "simplifying execution" and investing in key priorities like AI. Other firms, such as SAP, have also restructured to prioritize business AI as a core strategic area.
3. Lastly, macroeconomic uncertainty continues to play a role. Global inflation and concerns about a potential recession have caused companies to adopt a more cautious 'wait-and-see' approach, cutting costs and streamlining operations, especially in slower-growing sectors like enterprise software.

Companies and Roles Affected

The layoffs have been widespread, affecting companies across various segments of the tech industry. In January, Google laid off more than 1,000 employees, while Salesforce cut around 1,000 jobs over the year. Cisco reduced its workforce by 5% early in the year, with another 7% expected by the end of 2024. Intel, dealing with weak product revenue, announced plans to cut 15,000 jobs as part of a cost-cutting initiative.

The roles most affected include sales, marketing, and administrative positions, particularly in non-core areas where companies see room to streamline operations. However, engineering roles, particularly in AI, data science, analytics, and cloud computing, are in higher demand.

Tech startups have been significantly impacted by the 2024 wave of layoffs, struggling with reduced venture capital funding, economic uncertainty, and changing market demands. Startups, often reliant on investor cash flow, have seen a sharp decline in funding as investors become more cautious in an environment marked by rising interest rates and economic volatility. This has forced many startups to prioritize profitability over growth, resulting in layoffs and, in some cases, closures.?

The Pros and Cons of Tech Layoffs

Let's be upfront in saying that there are rarely pros for employees who are impacted by layoffs, having to deal with the resulting emotional and financial challenges. More on that below. Let's start with the organizational perspective.

Pros (for organizations)

• Efficiency Gains: For companies, layoffs often lead to a leaner, more focused workforce, which can increase efficiency. By eliminating roles that no longer align with strategic goals, businesses can reallocate resources to more critical areas, such as AI development and cloud computing.
• Restructuring for Future Growth: Many companies are using layoffs to reallocate talent and capital to high-growth areas. For instance, while Salesforce cut jobs, it has also ramped up hiring in its AI-driven initiatives.
• Skill Realignment: The layoffs are a chance for workers to reskill or upskill into roles that are in higher demand, especially in emerging fields like machine learning, generative AI, and cybersecurity.

Cons (for organizations

• Loss of Talent: While layoffs can help a company cut costs, they can also lead to a loss of valuable talent and institutional knowledge, which might hurt long-term innovation.
• Employee Morale: Remaining employees may experience lower morale, leading to decreased productivity and even further turnover.
• Short-Term Disruption: Layoffs can cause operational disruptions, with customers and partners questioning a company’s stability and ability to deliver on promises.

How Organizations Can Avoid Layoffs

Companies can take several steps to avoid the need for significant layoffs in the future:

• Smarter Hiring: Companies should align hiring with realistic long-term growth prospects rather than short-term demand spikes. Over-hiring can lead to issues when the market contracts.?
• Flexible Workforce Models: A shift toward more flexible labor models, such as temporary or contract work, can give businesses the agility they need to respond to market fluctuations without resorting to layoffs.
• Invest in Employee Reskilling: Rather than eliminating positions, companies can help their employees transition into new roles by investing in reskilling programs, especially in high-demand areas like AI, data analysis, and cybersecurity.

What to Do if You're Laid Off

For individuals affected by the layoffs, there are several strategies to stay competitive:

• Reskilling: Focus on acquiring new skills in high-demand areas, such as AI, data science, and cloud computing. Online platforms and professional development programs offer opportunities to gain certifications and knowledge in these fields. ?Take a look at platforms such as Coursera, Udemy and Udacity.
• Networking: Reach out to professional networks for new opportunities. Attending industry conferences, participating in webinars, and engaging with online communities can help expand job opportunities.
• Consider Different Sectors: Tech talent is increasingly in demand in non-traditional sectors, such as healthcare, finance, and education. These industries are undergoing digital transformations and offer potential career opportunities for displaced tech workers.
• Consider creating a blog and YouTube channel that helps non technical people learn about tech topics :)

When Will Hiring Resume?

Despite the layoffs, hiring in specific areas is still robust. Demand for AI specialists, data scientists, cybersecurity professionals, and cloud engineers continues to rise. While companies are cutting costs in non-core areas, they are also expanding in these high-growth fields.

Hiring for more general tech roles, however, may take longer to bounce back as companies recalibrate their needs. Experts expect that hiring in these areas could resume in earnest in late 2024 or early 2025 as the economy stabilizes and companies are better positioned to invest in broader growth initiatives.

Net Gains and Losses

While some roles are being cut, others are in high demand as noted above, These sectors are experiencing hiring booms as companies shift their focus toward automation, AI research, and data security. For example, Amazon, despite cutting jobs in its AWS division, is hiring heavily for AI and machine learning positions. Similarly, Google is investing more in AI and cloud roles, reallocating resources from underperforming divisions.

Jobs in High and Low Demand

• High-Demand Jobs: Roles in AI development, data science, cloud computing, and cybersecurity are expected to see significant growth. Companies are looking for professionals who can help them innovate in AI, automate processes, and secure their increasingly complex digital infrastructures.
• Low-Demand Jobs: On the other hand, traditional IT roles, middle management, and non-technical support roles, such as customer service representatives, are seeing the brunt of the layoffs.

Outlook for Hiring

Despite the current wave of layoffs, industry experts anticipate that hiring will resume in certain sectors by late 2024 or early 2025, particularly in the high-growth areas as identified above. As companies complete their restructuring efforts and stabilize financially, demand for skilled professionals in these fields is expected to rise. However, hiring for non-core areas like marketing and administration may take longer to recover.

Conclusion

The tech layoffs of 2024 reflect the evolving priorities of the industry, particularly the shift towards AI and efficiency in a challenging macroeconomic environment. For those affected, it’s a time of uncertainty, but also an opportunity to reskill and transition into roles that are in higher demand. With the right strategies, both companies and workers can adapt to these changes and prepare for the future of work in tech.

Wishing you all good fortune and smooth sailing ahead.

Recommended Resources for Tech Layoff Casualties

Here are three resources for guidance, support, and practical information:

1. Layoffs.fyi. ?his website tracks layoffs across the tech sector in real time, providing data on which companies are cutting jobs, the number of employees affected, and company-specific resources for laid-off employees. It often includes links to hiring managers looking for talent from companies undergoing layoffs, making it a valuable tool for job seekers in tech.
2. Glassdoor's Layoff and Career Guidance Hub. Glassdoor offers a specialized section with career advice for those impacted by layoffs, providing tips on managing finances, interview advice, insights on navigating severance packages, and networking strategies. It also gives detailed company reviews, so laid-off employees can get insights on where to apply next.
3. TrueUp.io. ?TrueUp is a platform that tracks tech layoffs in real-time, offering a comprehensive list of companies that have announced layoffs. It also provides tools to help job seekers find new opportunities and connect with hiring managers at companies still growing. The site includes a job board specifically targeting laid-off tech workers and a section that highlights companies actively hiring.?

Thanks for your time today!

Andy Mac, Non-Tech Coach

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