US IT market has a huge influence on the world's IT market, that's why we look on it deeply.
Current status
- In 2022, 165,000 jobs were cut.
- In 2023 – 263,000, which is 59% more than in 2022.
- As of June 2024, 104,000 workers have already been laid off in the technology sector.
- Large companies such as Apple, Amazon, Dell, Sony, Expedia, Microsoft, and PayPal have also announced layoffs in 2024.
- Comparison with 2008: only 65,000 jobs were cut in the technology sector then.
Competition in the Job Market:
- In short, is huge.
- Large number of applications per vacancy: on average, there are 278 candidates per vacancy.
- Employers often prefer recommendations from their employees, making it very difficult to find a new job in 2024.
But what are the main reasons for mass layoffs in the IT Industry? (spoiler: not AI, at least not now).
End of the COVID-19 Era 2020-2021
- Those hired during the COVID period are being cut because the expected demand for online services did not materialize.
Failures of New Technologies
- Web 3, NFT, Meta's metaverse, AR, VR, Apple Vision Pro – all these technologies have not achieved their expected success.
- Developers, as well as startups that invested time and resources in these technologies, lost their investments.
- Corporations, of course, need to compensate for these expenses. The easiest way is through layoffs.
Deglobalization of Technology
- Technology companies no longer have global reach due to regulatory restrictions and political barriers, for example, Apple will not expand its AI to Europe due to strict regulations of the Digital Markets Act (DMA).
- Also, many countries block or can block global products at any moment, for example in China, Russia, and so on.
- Therefore, companies will have limited access to international markets.
- Investors keep their money in bonds, and new startups have nowhere to get it from.
- Rising interest rates and expectations of economic recession are forcing companies to cut costs, including personnel.
- Economists advise companies to prepare for possible financial difficulties, which may include employee layoffs.
Impact of Twitter's Example
- After Elon Musk's purchase of Twitter and the layoff of 70% of employees, other companies began to review their staff.
- Mass layoffs at Twitter showed that many companies can function effectively with fewer employees, and there is no need for a huge number of developers.
- Of course, other corporations began to follow this example.
Shift from Software Development to Content Development
- People are becoming dependent on social media and digital entertainment, which reduces demand for new applications, websites, or games.
- Important people now: those who create content, not platforms for publishing content
Final thoughts
There are no simple ways for IT market recovering, and all IT companies and IT workers need to adapt to current conditions.
