Over the past two weeks, a total of 65,000 employees have been laid off from Amazon, Microsoft and Google, according to layoffs.fyi.This follows significant layoffs at both Meta and Twitter in 2022, as well as Spotify, IBM Salesforce and others.
In the automotive industry, electric vehicle company Arrival have announced it will cut it’s workforce by 50% while Lightyear, a solar-powered car start-up, has announced bankruptcy. Ford, meanwhile, is planning on cutting 3,200 jobs across Europe, following reductions in the US last year.
“Recessions can be the most exciting times for many businesses. Many amazing start-ups start in recessions.”
“It’s an opportunity for the talented people who have been let go to find opportunities in other tech areas with real potential,” he says.
During the pandemic, many tech companies over-hired as the industry rapidly expanded. Netflix, Amazon and Meta doubled their headcount while Microsoft and Google increased headcount by 50% to keep up with demand. Apple meanwhile, took a more conservative approach during the pandemic and only increased headcount by 20% and have not announced layoffs recently.
“Many tech businesses flourished during lockdown, and some presumed this would just continue after everyone returned back to the office,” says David Wicks, CEO of European and USA Tech Recruitment.
“It’s more of a belt-tightening on an industry that became a little too bloated a little too quickly,” says Ed Jackson, Director at USA Tech Recruitment “now, companies are being a little more careful with their spending.”
Spotify CEO Daniel Ek admitted that he was “too ambitious in investing ahead of our revenue growth.” Many tech companies became accustomed to incredible growth over the last decade. The loss of advertising revenue, which comprises the majority of profit for companies like Meta, has also impacted the industry.
Pierre-Olivier Gourinchas, chief economist for the International Monetary Fund, says that “the outlook is less gloomy than in our October forecast,” and despite continued nerves around a global recession, the US, Europe and China hasn’t been as badly impacted as originally predicted.
The tech layoffs are less surprising to those who were in the industry the first time round in the dot com bubble of the early 00s. Wicks, who has been through “a few bubbles” in his career, remains unfazed.
“The over-hiring by the FAANGS (Facebook, Amazon, Apple, Netflix and Google) has impacted start-ups and other companies trying to secure the best talent who have real long term business cases, whether it be green tech or other up and coming areas,” says Wicks.
While some industries have taken a step-back from aggressive hiring, many industries like semiconductor, battery, cloud-computing and cyber-security are expected to continue to grow. Industries like climate start ups have also shown to be recession resistant, while the automotive industry continues to hire. Software engineers across various tech sectors also continue to be in high demand. Tech talent with transferrable skillsets will be snapped up quickly, with a recent ZipRecruiter survey last year finding that among people who were recently laid off and worked in tech previously, 37% found a new job within one month, and 79% found a new job within three months.
Investments in tech innovation also continues, albeit more cautiously. It is predicted that this impending recession may spur innovation in fields such as 5G Industrial IoT, Connected intelligence, autonomous systems and quantum computing, much like the 2007 recession making way for disruptive technological developments like 4G LTE mobile broadband.
“There will always be a war for the best talent,” says Wicks.
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