Tech companies are always in the news, usually touting the next big thing. However, the tech news cycle recently hasn’t been dominated by the latest gadget or innovation. Instead, layoffs are in the headlines.
Authors
Nathalie Collins
Senior Lecturer, Edith Cowan University
Jeff Volkheimer
Senior Director, Collaboration and Continuity Technologies, Duke Health, Duke University
Paul Haskell-Dowland
Professor of Cyber Security Practice, Edith Cowan University
In , more than 70,000 people globally have been laid off by Big Tech companies – and that doesn’t count the downstream effect of contractors (and other organisations) losing business as budgets tighten.
What exactly led to this massive shakeout? And what does it mean for the industry, and you?
What’s the damage?
Since the end of the pandemic hiring spree, large numbers of employees have been fired from major tech companies, including (12,000 employees), (18,000), (11,000), (4,000), (10,000) and (8,000).
Other household names share the spotlight, including Tesla, Netflix, Robin Hood, Snap, Coinbase and Spotify – but their layoffs are significantly less than those mentioned above.
Importantly, these figures don’t include the downstream layoffs, such as advertising agencies laying off staff as ad spend reduces, or manufacturers downsizing as tech product orders shrink – or even potential .
And let’s not forget the folks leaving voluntarily because they don’t want to come , , or aren’t keen on Elon Musk’s “” philosophy.
The knock-on effects of all of the above will be felt in the consulting, marketing, advertising and manufacturing spaces as companies reduce spending, and redirect it .
So what’s driving the layoffs?
The canary in the coal mine was reduced advertising spend and revenue. Many tech companies are funded through advertising. So, for as long as that income stream was healthy (which was especially the case in the years leading up to COVID), so was expenditure on staffing. As advertising revenue decreased last year – in part due to triggered by the pandemic – it was inevitable layoffs would follow.
Apple is one exception. It strongly resisted increasing its and as a result doesn’t have to shrink staff numbers (although it hasn’t been immune to staff losses due to ).
What does it mean for consumers?
Although the headlines can be startling, the layoffs won’t actually mean a whole lot for consumers. Overall, work on tech products and services is still expanding.
Even Twitter, , is looking to streams of revenue.
That said, some pet projects such as Mark Zuckerberg’s likely won’t be further developed the way their leaders had initially hoped. The evidence for this is in the layoffs, which are concentrated (at least at Amazon, Microsoft and Meta) in these big innovation gambles taken by senior leaders.
Over the past few years, low interest rates coupled with high COVID-related consumption gave leaders the confidence to invest in innovative products. Other than in AI, that investment is now slowing, or is dead.
And what about the people who lost their jobs?
Layoffs can be devastating for the individuals affected. But who is affected in this case?
For the most part, the people losing their jobs are educated and highly employable professionals. They are being given which often exceed the minimum legal requirements. Amazon, for example, specifically indicated its and those who support them; not in warehouses.
Having a Big Tech employer on their CV will be a real advantage as these individuals move into a more competitive employment market, even if it doesn’t look like it will be as many had feared.
What does this mean for the industry?
With experienced tech professionals looking for work once again, salaries are likely to deflate and higher levels of experience and education will be . These corrections in the industry are potentially a sign it’s falling in line with other, more .
The recent layoffs are eye-catching, but they won’t affect the overall economy much. In fact, even if Big Tech laid off 100,000 workers, it would still be a fraction of the tech work force.
The numbers reported may seem large, but they’re often not reported as a proportion of overall wage spend, or indeed overall staffing. For some tech companies they are of the massive amount of new hires initially acquired during the pandemic.
Big Tech is still a big employer, and its big products will continue to impact many aspects of our lives.
The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.
