What to expect in 2023- Layoffs or Growth?

As we start the new year 2023 on a happy and bright note, looking back at 2022 might make one wonder about the strange turn the hiring, and the layoffs took in the last leg of 2022. Product giants and MAANG companies have collectively cut thousands of jobs around the world. While all of this might seem sudden, on closely observing the trends, we can easily comment that this event was something that was bound to happen.

Where it all started: 2019: When the COVID wave hit the world, every business had to be digitalized. There was an unprecedented surge in the demand for trained professionals for large-scale digitization. As more traditional businesses embraced technology, more employees had to be brought in. There was a need to set up an entire digital infrastructure for every industry, so there was a lot of work for tech companies, and not that many people. New talents were brought in, old ones were retained, and incentives were offered so that the demands of the market could be met. This also increased the compensation which encouraged the employees to look for more opportunities.

Coming back to 2022: The world returned to normal, and many macroeconomic factors came into play: the Ukraine war, increased inflation, and high-interest rates. All of these were red flags for recession. There were too many employees with not enough work, to cut down on the costs, some tough decisions had to be made and a lot of employees were let go.

In India, there were 4000 layoffs in 2021 compared to 14,224 in 2022 and these have come in majorly from start-ups, confirming the slow growth in the start-up landscape to the unicorn stage in 2022. The favorite word of the Indian Business industry in 2021 was unicorn and why not, 44 start-ups from India made unicorns in 2021 while this figure reached barely half, 21 unicorns in 2022.

Comparing the amount of funding received in these start-ups in total (seed + later stages) a total of $ 25.8 Billion was raised in 2021 while only $14.75 Billion were raised in 2022. The major decline occurred in the later stage funding, which was only $8 Billion for 2022, compared to the massive $20 billion for 2021. The later stage funding in the start-ups helps in rapid expansion and helps quickly gain the status of Unicorn. That being said, venture capitalists say that there is no dearth of funding for great ideas, the investors are just being careful about where to invest their fund and taking it really slow.

While some say the worst is over, we believe in looking at the positive side of this situation, layoffs in one industry, always point out growth in the other, while the tech industry has seen its highs and lows, we are witnessing growth from a consistent player whose graph has been moving up north since 2021- Banking, Insurance, and Fintech segment has an ever-present need of technologies to help with cloud migration, artificial intelligence, and other data analytics projects. Service-based technology firms have also been hiring extensively as the talent market is always ready to absorb back good talent.

Experts predict that similar market dynamics of caution will prevail till Q1 of 2023 and this will bring back the balance to provide more stability to all the stakeholders: Employees, employers, and the economy.

Are you affected by layoffs or someone you know is? Share this article with them to help them understand what the big picture is and there is hope. Crescendo Global works with Global conglomerates. Find open opportunities at www.crescendo-global.com.

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