The reason tech companies are laying off en masse is: copycat behavior?

Autor: Francisco Hernández

Analyzing market trends starting in 2023, it is remarkable that the technology sector continues with massive layoffs worldwide, and it seems that they will not cease during the year.

The media has ensured that every morning we have in mind the continuation of an economic recession that threatens to be more severe during the year. Adding to this, being spectators of massive layoffs in some of the most popular companies in the world, such as?Amazon, Meta, ByteDance (TikTok), Twitter, Netflix, and Microsoft, can be overwhelming for those of us who read from our desks or homes.

Although economic uncertainty is always a factor in the management of any business,?the reasons for layoffs do not necessarily follow the proportion of uncertainty.?Some scenarios that the technology industry is going through are:

1.?????We return to the pre-pandemic rates

Right now, the media is invading us with tendentious information. But let’s remember that at the beginning of the pandemic (2019), the technology industry, including entertainment, e-commerce, and innovation in hardware and software, boomed due to new consumer trends that made it easier to us to stay in our homes. Demand for services began to rise, so the hiring of personnel in these sectors followed the order in the market.

2. Signs of industry maturity

After an acceleration in innovation and demand, a recession naturally follows, a sign of consolidation. Although staying within a boom is almost impossible for any industry, the decline and slowdown after the significant growth is natural. Within the technology industry, handling large numbers, so knowing about ?hundreds of layoffs? may not be as substantial as the thousands of hires these companies usually have.

On the other hand, the modus operandi of the innovation and technology sector, especially in Silicon Valley, has already shown signs of?Copycat behavior?for administrative and financing decision-making. Stanford Business Professor Jeffrey Pfeffer has exposed this type of behavior.

“Recent layoffs across the tech sector are an example of “social contagion” – companies are laying off workers because everyone is doing it… Could there be a tech recession? Yes. Was there a bubble in valuations? Absolutely. Did Meta overhire? Probably. But is that why they are laying people off? Of course not. Meta has plenty of money. These companies are all making money. They are doing it because other companies are doing it”.

Stanford business Professor Jeffrey Pfeffer

In 2023, we welcome the post-pandemic period, a wave of tendentious information and news that will overwhelm our minds. So, let’s be attentive to analyzing the information with data and a strategic perspective so that the world continues to be full of opportunities to carry our talent to every corner of the world.