Understanding Tech Layoffs

In this year so far, 910 tech companies have laid off 143507 employees as per layoffs.fyi

Meta – 11,000 employees (13% of workforce)

Amazon – 10,000 (3% of workforce)

Bookings.com - 4375(25% of workforce)

Cisco - 4100 (5% of workforce)

Twitter - 3700 (50% of workforce)

But what happened?

2020 > Pandemic hit > Everyone got stuck at home > Recession-like situation due to lockdown > Layoffs shot up across all sectors including Tech in Q2 2020 > Later the world went digital > Tech adoption peaked > Revenues of Tech grew steadily > Hyper positive outlook on future of Tech Industry > Interest rates dropped, money was flowing, Venture Capital Investments peaked > Over hiring > Talent war > Salaries increased/Doubled

2022 > People no more stuck inside > Consumer Behaviour changed > Demand for digital dropped > Non-tech spending increased > Economic activities started shifting to the physical world > The US central bank tightened money supply > Lot of uncertainty everywhere > Advertisers cut back on spendings > Revenue of tech companies dropped > Growth slowed > Pressure from investors to reduce cost > Layoffs shot up in Q2 2022

Elon Musk took over and pushed Twitter to perform with a fraction of its previous headcount.

Apple changed its privacy clause requiring apps to ask users if they wanted to be tracked, thus affecting their ad-focused business model.

Metaverse-first, not Facebook-first, well, not everyone resonated with that idea.

Are Layoffs a sign of tanking economy? I don’t think so!

• First, the tech industry only makes up a tiny fraction of the broader jobs market, so it wouldn’t have a far-reaching impact on unemployment.
• Second, workers laid off from the tech industry could likely find alternate jobs, given the number of vacancies.
• Lastly, mass lay-offs in the tech industry have been observed in the past but didn’t always point to job cuts elsewhere in the economy or to a market downturn.

Challenges for the migrant employees:

• It has now become a challenge for laid-off employees to find an employer to transfer the visa petition in 60 days to stay in the US.
• If employees come back to India and reapply, they are sure to face longer wait times for visa appointments at US consulates in India.
• Many have hefty student loans to repay and expensive living costs in the US can add to the burden.
• America's WARN (Worker Adjustment and Retraining Notification) Act can be a breather that requires employers to give a 60-day notice to the affected employees during a mass layoff.

Opportunities in these difficult times:

• Communities have come together to support each other, raise finances and spread information, and offer referrals for prospects online.
• Platforms like Zeno have come up to help impacted workers find jobs.
• Software developers and engineers, leaving big tech companies with years of experience and joining smaller companies/start-ups can be a start-up booster.
• Many tech employees can return to India for work, but I doubt the number to be high.

What is the way forward?

Tech is still growing; the growth has just slowed down. Private equity and Venture capital investments have already started making their way back to the tech companies. Having learned from the past, it is most likely that Tech companies will hire in a more phased manner and keep the employee cost as a percentage of revenue to the optimum. After all, Tech is an inseparable part of the future and is going to grow despite a few blunders.

The recent Tech Layoffs have highlighted some interesting HR challenges:

• How ethical is Layoff through email and where is the human touch in human resources?
• Employee cost is the first cost to be cut when things go south, do we pay enough attention to optimising other costs?
• Whom to keep and whom to let go, as there arises no pattern when High Performers and people with skills are laid-off?
• Should there have been pay cuts rather than mass layoffs as Ashneer Grover pointed out?
• Have layoffs put a dent in the ‘Best Employer’ tag of the Big Tech Giants? The best talent would not want to work for companies that kind of indiscriminately and without any empathy lay people off at the first sign of trouble.
• As companies go for background checks of employees, employees might now check the company’s layoff record. How are we going to deal with this new Employer Branding challenge?
• How much should the companies own up about the severance pay, health insurance, immigration support, etc?
• Tech companies are known to hire more than they need. What is the right size of the reserve workforce tech companies should keep?
• Those who stay face increased workloads and pressure to perform, leading to overwork and lack of job satisfaction, how are we going to address this employee engagement challenge?

I hope this article helped you understand the layoffs better and I hope our brothers and sisters who have recently lost their jobs find one soon.

#HRwithAbrar