In the last few months, from late 2022 to the present day, tens of thousands of jobs have been eliminated as major firms reduce their workforces. To clarify, by "major" I mean the likes of Amazon, Microsoft, Salesforce, Google, Meta, Tesla, Twitter, and now Spotify!
Having written a blog on Salesforce and the recession and how to future-proof your career a few months ago, I feel naïve. Does any job inherently offer protection from the recession? These workers are skilled and highly sought-after individuals with many opportunities available to them, but as the COVID-19 economic trends draw to an end, big tech companies are no longer riding the wave of prosperity. Thus, we see these mentions of layoffs on our newsfeeds almost every day.
Experts have dubbed it the 'Tech Sector Retrenchment'. Here are some facts and stats.
The latest
It was announced this morning, Monday 23rd January 2022, that #Spotify is the latest tech giant to follow suit, with the audio streaming platform laying off 6 percent of its employees (about 600). As soon as the news broke, Spotify indicated that it was undertaking this action in order to keep expenses down as concerns about a #recession loomed.
Daniel Ek, Spotify's CEO, message to employees "to bring our costs more in line, we've made the difficult but necessary decision to reduce our number of employees," Ek wrote.
On Friday 20th January 2023, Google's parent company announced that it would be cutting 12,000 jobs. In addition, on Wednesday 18th January 2023, Amazon and Microsoft collectively laid off 28,000 jobs.
As Microsoft's CEO Satya Nadella explained in an email to employees, the company was also adjusting to a slowing economy and optimizing its digital spending.
So why is this happening?
To put it mildly, tech giants are concerned about the current economic situation and are attempting to cut costs across the board. The pandemic-driven boom in demand is rapidly ebbing away, and technology companies are struggling to adapt to the changing economic environment. As some of the largest technology companies in the world struggle, they announce waves of layoffs, eliminating thousands of jobs as they reverse course after years of expansion.
Why the pandemic-driven boom?
When you were furloughed, working from home, or sleeping under a rock like me during the pandemic, what did you do? You went online! As digital demand increased, technology companies employed a significant number of new employees.
Lockdowns caused by the pandemic resulted in an increase in remote work, e-commerce sales, and hiring sprees for technology companies such as Amazon, Oracle, Microsoft, Salesforce, and Facebook trying to keep up.
Keeping these employees on when revenue is declining, spending habits have changed, and the economic situation is uncertain is no longer feasible. Moreover, layoffs are not limited to technology giants. The effects of hypergrowth caused by the pandemic are now being felt by smaller technology firms as well.
The future?
However, despite the forecast for a substantial increase in IT spending in 2023, with enterprise software and services seeing the largest increases, concerns regarding supply chain issues, inflation, and the war in Ukraine are clouding the outlook. Impacting both consumer and business spending, due to recessionary fears.