What AU SMEs Should Learn from the Current Tech Industry Lay-Offs

Historically, the tech industry has been characterized by its relatively low layoff rates, drawing in top talent attracted by the perceived stability and security of employment. Yet, last December 2023, layoffs in the global tech sector were estimated to have surged past 262,000, a concerning trend that has persisted into 2024, affecting regions including Australia.

Australia's tech sector, in particular, faced layoffs at the beginning of 2024 despite the improved financial status of many AU companies. Since 2023, several Australian tech companies have reduced their workforce, aligning with global tech industry trends.?

For instance, Linktree, a software platform, laid off 27% of its workforce . Co-founder and CEO Alex Zaccaria expressed that the decision, though difficult, was necessary for the company to pursue growth opportunities internationally.

So, what’s bringing about these layoffs?

Well, there are three potential reasons:

• Market Correction – Investors are more cautious due to the worldwide economic slowdown and increasing interest rates.
• Shifting Priorities—Companies are refocusing resources—whether towards AI tools or core competencies—which reduces the need for a human workforce.
• Global Restructuring – Consolidating operations and streamlining processes have led to local job losses.?

At the core of these are the following factors:

• Budget tightening and reduced spending due to economic downturns?
• Rapid, almost-unpredictable shifts in consumer behaviour?
• Reliance on technology services from overseas instead of domestic tech solutions

The impact? Large companies like Google and Microsoft, alongside numerous smaller startups, collectively let go of nearly 25,000 tech workers in January 2024 alone . This continuing trend of job cuts suggests a widespread restructuring rather than isolated incidents. Adding to the uncertainty, details about which companies are cutting jobs and the most affected roles still need to be clarified.

Still, despite the challenges, opportunities remain.

Tech lay-offs, negative, enable entrepreneurs to adopt sustainable practices that benefit business owners.?

• Partnering with local universities, incubators, and tech accelerators supports local tech initiatives, leading to collaborative projects, mentoring startups, and providing internships.?
• This allows companies access to skilled professionals, as they stay updated on trends and are privy to new technologies.?
• Additionally, outsourcing talent provides access to a broader talent pool, cost-effectiveness, and scalability for project requirements.?Embracing agility, diversifying skills, and fostering a culture of continuous learning are essential strategies that will add value to any business. This situation underscores the importance of resilience and the need for businesses to be prepared for unforeseen changes in the market. By observing these trends and implementing strategic adjustments, Australian SMEs have the opportunity not just to get through these tough times but also to set themselves up for long-term growth and success.
• To learn more about how you and your business can secure a stronger future, despite the tech industry’s current challenges, check out our full article here .