From Snap Inc. to Microsoft to Meta to Twitter and now Amazon, the world’s major tech players have officially launched a layoff season unlike any other, leaving tens of thousands of people without jobs.
Amazon, the latest player to join the mass layoff season, is reportedly set to fire 10,000 workers soon.
“After a deep set of reviews, we recently decided to consolidate some teams and programs. One of the consequences of these decisions is that some roles will no longer be required,” stated Dave Limp, Amazon’s senior vice president of devices and services, in a memo shared on the firm’s website.
Meta – the parent company of Facebook, Instagram and WhatsApp – has seen the worst of the cuts, with 11,000 workers fired last week.
Elon Musk’s new regime at Twitter has seen nearly 4,000 people let go, and the numbers only seem to be mounting.
The number of layoffs has been so astounding that a whole website has been dedicated to the tracking of fired employees from tech companies. The website reports that over 100,000 employees have been laid off from 814 tech companies worldwide in 2022 alone.
Here are the major reasons why tech companies are laying off their employees in the thousands:
- The Aftermath of the Pandemic
While the rest of the world packed up during the pandemic, the tech world saw a boom because the only way the world could stay connected was online. Netflix and other major streaming services easily replaced cinemas; online shopping became the only form of shopping; food delivery services replaced dining out; physical meeting rooms were replaced by Zoom conference calls and so on. The world retreated indoors and online, and the tech sector reaped the most benefits.
The immense surge in demand for online services meant tech companies had to hire thousands of employees to meet up. There were record levels of revenue, so they could afford to hire lots more engineers, developers, designers and other tech workers; expand departments and even create entirely new ones. A lot of firms also hired more employees than they needed to allow for redundancy – essentially backup staff.
However, this chapter in the world’s history would not last for too long and the tech sector was largely unprepared for it. As the world is opening up, the demand for tech services is generally declining and firms can no longer keep up with the fiscal demands of a large workforce. Many have termed the current layoff season a correction of the mistakes that were made during the pandemic.
- Troubling Economic Conditions
The rising inflation and potential recession in the US – which is the seat of most of the tech giants – has forced many companies to cut back on advertising expenditure which is a major source of income for tech companies. Consequently, the latter’s revenues are expected to dwindle. To ensure they stay buoyant during the looming volatile period, tech companies have decided to let go of all their “excess staff”.
This was one of the reasons cited by Meta CEO Mark Zuckerberg in a letter posted to the company website. As more startups are emerging and offering the same services, the market shares of older tech firms have reduced and this has adverse effects on their revenues.
All these factors have compounded to birth the current layoff season.
Tech companies have also decided to cut back on benefits for the remaining employees as well as investments to reduce their overall costs.
Many have dubbed this period an eye-opening one for tech workers who have previously seen themselves as indispensable, forcing them to always have backup plans ready. Nonetheless, it is hard to breeze through such a sudden and impactful change as this. Moreso, some companies have been more ruthless than others with their layoffs.
Sources: Forbes, NPR