The number of workers fired by technology companies in the first 40 days of 2023 is rapidly approaching 100,000 according to data from Layoffs.fyi – a website that specializes in keeping tabs on headcount reductions within this sector.
The site’s tally is currently ascending to 97,520 laid-off employees from a total of 313 companies. These businesses have been reducing their headcount due to reasons including a deterioration in the macroeconomic backdrop and aggressive hiring during the pandemic.
According to the site’s spreadsheet, Alphabet (GOOG) – the parent company of the world’s most popular search engine – has fired the largest number of workers in absolute terms as approximately 12,000 people were let go in late January.
In total, four companies from the so-called FAANG group have let go of more than 10,000 workers while other prominent tech firms such as Salesforce, Dell Technologies, and Phillips have laid off thousands of people as well.
Meanwhile, just a few hours ago, e-commerce giant eBay announced that it will be laying off around 4% of its workforce – 500 employees approximately – after conducting a thorough review of the macroeconomic situation.
Last Year’s Layoff Figures Will Probably Pale in Comparison to 2023’s Tally
According to Layoffs.fyi, nearly 160,000 people were laid off by tech firms last year with a total of 1,044 firms trimming their headcount amid an expected slowdown in the global economy and as a way to reduce overhead at a point when raising capital is getting more and more difficult – especially for early stage businesses.
At this pace, 2023 will far exceed last year’s figure. Amazon (AMZN) could arguably be the firm that laid off the most employees last year with over 10,000 terminations followed by Cisco and Phillips, both of which fired more than 4,000 people in the last quarter of the year.
In percentage terms, Twitter remains the largest contributor to last year’s tally as the company founded by Jack Dorsey and recently bought by Elon Musk reduced its headcount by 50% right after the acquisition was settled.
Why are Tech Companies Laying Off so Many People?
Tech firms have been affected by multiple headwinds shortly after the pandemic ended. First, they aggressively ramped up their headcount to respond to the growing demand that their products and services experienced while people remained confined within their homes.
Secondly, central banks have been progressively raising interest rates for more than a year now and this has rattled the markets and has made it more difficult for firms in this space – which can sometimes have weak business models from a fundamental standpoint – to raise the capital they need to stay afloat.
Finally, economists are expecting a global economic slowdown during the next 24 months due to the impact of high inflation and elevated borrowing costs on consumers’ pockets. Therefore, some firms in the tech space are preparing to take a hit in their finances and are responding accordingly by reducing their payroll costs.
Analysts that specialize in the tech sector are not necessarily viewing these job cuts as a bad sign. Instead, they have flagged them as “right-sizing” – a term that refers to a company’s effort to operate with the optimal number of workers that ensure its growth and productivity.
Meanwhile, experts in the human resources field have said that workers within the sector are finding new opportunities relatively fast as the industry is mostly responding to the hiring spree that took place during the pandemic and not contracting necessarily from an economic standpoint.
“Even with the layoff climate that we’re seeing, it’s always competitive. The supply is too short for the demand”, Jennifer Reed, the senior director of talent acquisition for Docebo, told CBC News in late January.
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