Tech Layoffs Aren’t Slowing Down for Many Companies—Here’s Why
Layoffs started hitting tech companies beginning in early 2022. However, as the year progressed, so did the frequency and size of these layoffs. What’s even more concerning is that this trend carried over to 2023. It has been estimated that over 94,000 tech employees will have lost their jobs in 2023 alone. Meanwhile, the total number of layoffs estimated for the full year of 2022 was 150,000. Hence, in just two months, the tech industry is already two thirds of the way to laying off as many employees as were laid off in an entire year.
What’s even more unsettling is that predictions suggest these layoffs will not slow down anytime soon. Additionally, the severity of these cuts is rising as giants in the industry like Google, Amazon, and Meta have begun to instigate them. Considering the size of their workforces, the layoffs for each of them were in the thousands and even tens of thousands. Qualcomm, Cerebral, Eventbrite, Waymo, Wix, and Twitter are just a few more tech companies that have laid off large portions of their workforce since January.
One reason for the layoffs is the state of the economy. Many fear that we are heading towards a recession as economic growth flounders and inflation and interest rates rise. As a result, many companies have found themselves needing cost-cutting measures, and downsizing their workforces is one such measure. However, the economy isn’t the only problem, otherwise, many more industries would suffer. Massive layoffs have particularly impacted the tech industry because of over-hiring during the pandemic. Due to the lockdown and increased remote work and internet usage, tech companies experienced a boom during the pandemic and hired thousands of employees. Since the growth wasn’t sustained, companies are now, essentially, reversing their pandemic hiring by laying off employees by the thousands.
The Google layoffs and Google job cuts explained
Google was one of the most recent tech giants to instigate massive layoffs. On January 23, Google laid off a staggering 12,000 employees worldwide. Google’s CEO Sundar Pichai announced the layoffs through an email sent to employees and posted on the company’s blog. Those who were being laid off received a separate email prior to the announcement to inform them of their job loss. In the public statement, Pichai pointed to Google’s zealous hiring during the pandemic as the cause of the layoffs. He wrote: “Over the past two years we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today.”
In his letter, Pichai also talked a little bit about Google’s future and priorities following these layoffs. He specifically singled out Google’s “early investments in AI” as one of the opportunities he was “confident” about. This is very interesting because other tech giants, like Microsoft, in the midst of massive layoffs, also confirmed increased investment in artificial intelligence. This doesn’t mean that these employees are being replaced by AI, as some have claimed. However, it does mean that these companies believe AI is a better investment than maintaining their workforce. Some fear these companies do intend to replace workers with AI in the future, potentially sparking more waves of layoffs.
Meanwhile, Google’s layoffs are still impacting workers today. This is because the layoffs are trickling into many of Google’s subsidiaries, as well. Hence, a second round of job cuts hit Waymo, a subsidiary of Google’s parent company Alphabet, Inc., on March 2. The company had already laid off many workers earlier this year, but on March 2 laid off an additional 137 employees, resulting in 209 layoffs in the subsidiary this year, so far.
The Qualcomm layoffs explained
Qualcomm, a multinational corporation specializing in wireless technology, also began layoffs in December 2022. On December 22, the company announced it was laying off 153 of its San Diego workforce. Fortunately, the company gave more advanced notice to their employees than some companies have, announcing them in December before they went into effect in February 2023. However, more rounds of layoffs may be forthcoming as the company announced in late January it was also laying off dozens from its Israel-based workforce.
Qualcomm’s layoffs largely come down to the economy. In 2022, smartphone demand plummeted drastically, sending wireless technology companies like Qualcomm into a panic. According to CNBC, 1.21 billion smartphones were shipped in 2022, which marks the lowest annual shipment in nine years. Sadly, the decline in smartphone sales is only expected to keep climbing this year. Due to the economy and inflation, many consumers simply can’t justify smartphone expenditures and are keeping their current smartphones for longer periods, thus, further hurting tech companies.
The Meta Facebook layoffs explained
Meta is another company that started massive layoffs last year but could be planning further rounds in 2023. The massive layoffs were announced on November 9, 2022, in a letter from Meta’s CEO, Mark Zuckerberg. Zuckerberg revealed that the company was laying off a staggering 11,000 employees, cutting its workforce by 13%. He also revealed that the company was freezing hiring through Q1 and would cut “discretionary spending.” Despite these massive initial layoffs, recent reports claim that the company is planning another round of layoffs that could potentially impact thousands of more employees.
While the economy and pandemic hiring likely contributed to the layoffs, Meta’s enormous spending seemed to be a bigger contributor. According to CNBC, Meta’s spending “jumped 19% year over year in the third quarter to $22.1 billion.” These figures were even more concerning because the company also saw a sales decline in Q4, as well as a massive decline in operating income in 2022. Meanwhile, the source of all this massive spending seems to be the Metaverse.
Not a lot of information has been released about the Metaverse, but it is supposed to be a virtual reality through which users can socialize. Zuckerberg seems to think it is a worthy investment considering he has poured a staggering $36 billion into it. Reportedly, the company is spending roughly $1 billion on Meta per month.
Meanwhile, Zuckerberg knows full well that the Metaverse is costing the company greatly, even warning shareholders to anticipate “significant” losses over a period of between three and five years. Given this info, Meta’s layoffs are among the most frustrating. While some companies really can’t control slow growth in the industry and the economy, some tech companies are selfishly sacrificing their workers to pour billions into their visions for AI or VR.
(featured image: Cesc Maymo/Getty Images)
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