Friday, January 27, 2023

Thousands of employees are being let go by Big Tech. Why? How concerned should we be?

Big Tech is firing employees by the thousands. Why? And how worried should we be?

 DURHAM: Tech companies are frequently mentioned in the media, typically promoting their latest innovation. However, the most recent innovation or gadget has not dominated the tech news cycle recently. Instead, the news is all about layoffs.

More than 70,000 people worldwide have been laid off by Big Tech companies in the past year. This does not take into account the repercussions of contractors and other organizations losing business as budgets tighten.

What exactly caused this huge shift? And what does it mean for both you and the business?

What has happened?

Alphabet, which employs 12,000 people, Amazon, which employs 18,000 people, Meta, which employs 11,000 people, Twitter, which employs 4,000 people, Microsoft, which employs 10,000 people, and Salesforce employs 8,000 people.

While Tesla, Netflix, Robin Hood, Snap, Coinbase, and Spotify share the spotlight, their layoffs are significantly lower than those mentioned above.

Importantly, these figures do not include any subsequent layoffs, such as employees being laid off by advertising agencies as a result of a decrease in ad spend or by manufacturers as a result of a decrease in orders for technology products – or even upcoming layoffs.

Also, don't forget the people who leave on their own free will because they don't want to go to work, don't like their managers, or don't like Elon Musk's "hardcore work" philosophy.

As businesses reduce spending and redirect it toward AI innovation, the knock-on effects of all of the aforementioned will be felt in the consulting, marketing, advertising, and manufacturing industries.

What then is causing the layoffs?

The canary in the coal mine was less money spent on advertising. Advertising provides funding for many tech companies. As a result, staffing costs were incurred for as long as that income stream was stable (especially in the years prior to Covid). Layoffs were inevitable as advertising revenue decreased last year as a result of worries about a global recession brought on by the pandemic.

Only one exception is Apple. Although it hasn't been immune to staff losses due to changes in work-from-home policies, it has strongly resisted increasing its head count in recent years. As a result, it doesn't have to reduce its workforce.

What impact does it have on customers?

Even though the headlines can be shocking, consumers won't really care much about the layoffs. In general, work on tech services and products is still growing.

Even Twitter, which many people thought would be dead by now, is trying to find new ways to make money.

However, it is likely that some cherished endeavors, such as Mark Zuckerberg's Metaverse, will not proceed in the manner that their leaders had initially envisioned. The layoffs, which are concentrated (at least at Amazon, Microsoft, and Meta) in these significant innovation risks taken by senior leaders, are evidence of this.

Low interest rates and a lot of Covid-related consumption over the past few years gave leaders confidence to invest in new products. That investment is now slowing or is dead, except in AI.

What about those who were laid off from their jobs?

For those who are impacted, layoffs can have devastating effects. But who is impacted by this situation?

The majority of those losing their jobs are educated professionals who are highly employable. They are receiving support and severance packages that frequently go above and beyond what the law requires. For instance, Amazon made it clear that the tech staff and those who support them would suffer the most. not in storage areas.

Even if it does not appear to be quite as heated as many had feared, having a Big Tech employer on their CV will be a real advantage as these individuals move into a more competitive employment market.

What does this indicate for the sector?

As experienced tech professionals look for work once more, salaries are likely to fall, and getting a job will require more education and experience. The industry's recent shifts may indicate that it is aligning itself with other, more established segments of the market.

Although the recent layoffs are notable, they will not significantly impact the economy as a whole. In point of fact, even if Big Tech laid off 100,000 employees, that still only represented a small portion of the tech workforce.

Although the reported figures may appear substantial, they are frequently not reported as a percentage of overall staffing or wage expenditures. They are only a small portion of the enormous number of new employees initially hired during the pandemic for some tech companies.

Many aspects of our lives will continue to be impacted by Big Tech's big products, and Big Tech is still a significant employer.

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