There has been a continued trend throughout 2024 of tech layoffs which has seeped through 2023, only to intensify. As per a data approximately 32,000 tech workers have faced layoffs in 2024. After a major firing spree throughout 2023 in major global tech companies, situation continues to remain bleak for employees across all major departments as over 30,000 tech employees have been laid off in January 2024.
The tech industry has experienced significant growth and innovation over the past decades with companies like Google, Microsoft, and Amazon having transformed the way we live and work. Though that seems to be changing now.
Tech layoffs 2024
According to data collated by Layoffs.fyi, tech industry layoff account to about over 30,000 employees across the globe in just January this year, with UPS, Google, Microsoft, Amazon and Accenture firing thousands within weeks.
UPS accounts for 40% of the overall tech layoffs in January 2024, firing over 12,000 employees in just one month. Google has laid off over 1000 employees in January, while PayPal has fired 2500 employees.
While Amazon has not disclosed the number of tech layoffs for January 2024, it is believed to be in thousands. Other major tech firms like YouTube, TikTok, Discord, ebay and Pixar have also collectively laid off over 5000 employees in the first month of the year.
In 2023, a total of 2,62,595 employees were laid off by 1189 tech companies, according to Layoffs.fyi. Majority of these tech layoffs were due to surplus hiring during the pandemic and cost cutting amid high inflation and rising interest rates.
With over 30,000 fired in just the first month of 2024, this year is projected to be worse in terms for job cuts as compared to last year. Google has already announced that there will be more layoffs later in the year.
Tech hiring during pandemic
The current wave of layoffs in the tech sector is largely attributed to a correction of the surge in tech hiring during pandemic, compounded by prolonged high-interest rates and a downturn in the technology industry. Roger Lee, the founder of Layoffs.fyi, identifies two primary phases of job cuts: the initial ‘early Covid’ spike from early 2020 and the ongoing ‘interest rate hike’ effect starting in mid-2022. This year’s layoffs, though smaller and more focused compared to last year, reflect a strategic shift among tech companies. Many are reallocating resources toward the burgeoning field of artificial intelligence (AI), with AI in workplace and AI-related job postings. This shows the importance of AI in the workplace.
Inflation and rising interest rates
Executives in the tech industry have justified the mass layoffs by citing high inflation and weak consumer demand as factors driving the downsizing. The rising costs of raw materials, supply chain disruptions, and increased labor expenses have put a strain on company finances. Additionally, consumer spending patterns have shifted, with less demand for certain tech products and services. These factors have contributed to a need for cost-cutting measures, including layoffs, to maintain profitability.
Layoff trends
According to Jeff Shulman, a professor at the University of Washington’s Foster School of Business, there is a herding effect in the tech industry. Layoffs seem to be helping stock prices, leading companies to believe that there is no reason to stop downsizing. This layoff trend is driven by the perception that it can boost investor confidence and ultimately increase stock value. As a result, companies are more inclined to continue with layoffs, even if they are not economically necessary.
Will the Tech Layoffs Ever Stop?
Tech companies navigate tightrope of talent reshuffle and AI investment in an uncertain economic climate. Market watchers anticipate potential rebound after Fed signals rate cuts, but caution remains for next few quarters. Focus on AI skills at workplace and adaptation to changing market conditions is likely going to define the tech hiring landscape.
Continued hiring in specific domains
Despite the reduction in workforce, the tech industry simultaneously exhibits robust hiring in specific domains, particularly AI. CompTIA reports 33,727 active tech job postings in January 2024, the largest month-over-month increase in the past year. This suggests a dynamic shift within the tech sector, where certain job roles are phased out while others, especially those related to AI, are experiencing significant demand.
Tech layoffs future
The tech industry’s layoffs, coupled with its aggressive hiring in areas like AI, indicate a complex transition period. According to Bert Bean, CEO of staffing company Insight Global, most tech layoffs may have alr ady occurred, and companies could begin to recover. However, market uncertainties are expected to persist for about the next two quarters, hinging on the Federal Reserve’s actions regarding inflation and interest rates. This situation presents a dual-faced scenario in the tech world: a challenging environment for job security on one hand, and burgeoning opportunities in emerging technologies on the other.
