Tech layoffs in 2024
In recent years starting 2022, soon after the COVID-19 pandemic, economic uncertainties triggered major layoffs from big tech companies. These companies were well known for their perks, work culture, and employee benefits before the layoffs. However, since the economic downturn coupled with high inflation and interest rates, tech companies have been pulling back on recruitment and laying off existing employees to stay financially afloat.
Dive into this article and understand why there has been such a drastic rise in tech layoffs and how we can move forward in this situation.
Restructuring and strategic shifts
In such a volatile environment, it is not surprising that companies are indulging in some sort of internal restructuring. A shift in business priorities will lead to an elimination of departments or projects and hence to many job cuts. Some companies are looking to use technology more efficiently and replace people with technology or streamline their cost structure and hence layoffs happen.
Economic uncertainty
A general fear of recession has led to a decline in Tech stock prices. This made investors cautious and they influenced tech companies to become more cost-conscious which led to several layoffs. Uncertain business environment, sluggish demand for products all lead to low morale in the market which have directly impacted layoffs.
Overstaffing
During the COVID-19 pandemic, there was a sudden surge in demand for certain services like e-commerce. This led to a massive hiring spree by certain companies. Soon after when the economic uncertainty hit and the economic climate changed, companies realized that the surplus staff were redundant. This led them to indulge in layoffs and they cut jobs massively.
Push from investors
Post the pandemic, investors started demanding greater efficiency from companies. These companies had to implement certain cost-cutting measures when they came under pressure. Financial performance was enhanced following widespread job cuts which lead to higher profit margins and improved valuation. The cash saved from these expenses were available for growth in other areas. These job cuts were aimed at enhancing investor confidence and overall effectiveness of companies.
AI and automation
AI is taking over some of the tasks that were earlier performed by humans. Routine and repetitive tasks are being assigned to AI. Hiring people involves a tedious recruitment process and training thereafter. Instead, companies are spending big bucks on AI software systems that they believe can save on costs of recruitment. Currently the AI-related layoffs are small, however, it is expected to become significant in the future.
Mergers impacting jobs
When two companies merge, the two entities combine their operations. Ownership and buyouts also take place which completely shake up the operations and the reporting patterns. During such times, how jobs are organized, what skills they need, and even names of departments are often changed completely. This leads to some employees losing their jobs. The new entity is still trying to settle down and so layoffs become necessary to rejig and enhance productivity of the new entity.
Rise in outsourcing
Some tech companies choose to suddenly outsource some work. Often this is a decision favouring outsourcing for cost benefits. Outsourcing work to countries where labour is cheaper can save tech companies a great deal of money. Unfortunately for the employees of such Tech companies, they have to face the layoffs.
Summary
Rather than substituting humans with AI, going forward, to consolidate the workforce, prioritizing a leaner team of professionals who want to work with AI rather than push against it will be preferred. This will also increase operational efficiency. We should move towards having an AI-savvy workforce that can work on the complex interplay between technology and human ingenuity.
As we confront the complexities of the tech employment landscape in 2024, the onus is on us to adapt, innovate and navigate this terrain.
