Here’s why global tech companies are laying off thousands despite big rise in earnings
As per the International Labour Organisation, the global employment growth rate is expected to slow down to 1% in 2023 as compared to 2% in 2022
Tech layoffs have left the employment scene bloodied. So far, Google has officially laid off 12,000 employees, Amazon 18,000, Meta 11,000, Salesforce 8,000, Twitter 4,000, IBM 3,900, SAP 3,000, and Coinbase 2,000.
Microsoft is planning to reduce its headcount by at least 10,000 and Google investors are reportedly pressing CEO Sundar Pichai to reduce the workforce by half to improve profitability.
In all, over 200,000 tech jobs were eliminated globally by the end of 2022.
But the first month of the new year itself has seen nearly 70,000 technology jobs eliminated. Indian tech companies, particularly, startups, have been part of this global tech layoff calamity.
The current spate of layoffs is being attributed to years of aggressive hiring that must be rationalised for the companies to remain competitively productive.
Another argument being put forth is that the tech sector with its current product portfolio has matured and reached a state of stagnation.
The technology sector needs to find new areas for growth. And, for this, the right skill set and talents need to be aligned.
But more than that, a new culture needs to be built within the organisation that encourages and compels tech professionals to go out of their comfort zone and create new things. For this shift in work and cultural values, the human resources department must wield put the knife to the flab.
HR departments across the technology sector companies are slowing down their recruitment process. Many have already put it off for the time being. Large-scale corporate recruiters are completely off the list.
Many companies that were still hiring during COVID-19 times have reduced the number of recruitments this year, which may continue till next year or so. Those companies that have already gone through placement interviews are delaying their onboarding process for some time.
As fear of recession looms over the market, experts are worried that companies will raise the benchmark for recruiting candidates and lower their salary packages as compared to previous years.
The most likely scenario in college placements would see less rush of companies for recruiting freshers and graduates. Expecting tech giants such as Amazon, Facebook, Google, and Microsoft to conduct large-scale hiring is the most unlikely scenario. Few are expecting this is going to happen this year.
Final-year technology students seem to be confused about whether to take up the jobs being offered amidst the fears of layoffs. Many of them with available job offers are considering ignoring the offer and moving abroad for further studies till the situation becomes normal.
Moreover, they are not in a position to negotiate the terms of their employment anymore, at least for now.
India, which supplies technology professionals to the global market as much as it uses them in the domestic business ecosystem, has been hurt on both ends. Amidst the job losses, there is rising uncertainty among graduating freshers at India’s top technical education institutions. Declining job opportunities, eluding campus placements, and an uncertain future in technology are some of the hotly debated topics across campuses in India, hinting that it could be the same everywhere in the globe.
Sources claim students are particularly worried about landing a job as big tech companies continue to sack their experienced and loyal employees.
Employees that were laid off by big tech are said to be those who were not willing to adapt to new technologies and had poor performance in the last 2-3 years. Some of them were involved in moonlighting and other things. They won’t be able to compete on experience level, however, they upgrade their skills and knowledge to showcase their lucrative candidate profile.
As they are well versed with current trends in technology, willing to take risks, try out new things and learn new skills, it can be used to their advantage to get a job. In case the company is looking to replace those lay-off employees, fresher would be their go-to choice in terms of cost-benefit analysis.
While the fear of slowdown and job cuts is still limited to the IT, finance, and media sectors till now, it is likely to spread to other sectors as well. As per the International Labour Organisation, the global employment growth rate is expected to slow down to 1% in 2023 as compared to 2% in 2022.
However, there is a positive side, too, to the layoff story and it is that this whole situation would open up the space and provide the chance for highly skilled graduates to prove themselves.
There are two sides to the debate: those who are optimistic that the recent layoffs are just part of the process of advancing technology, and those who are pessimistic and believe that the sector is becoming less secure.
The latter points to the increasing number of tech startups and companies that are failing as evidence that the sector is not as strong as it once was. In response to these layoffs, many tech workers have expressed their thoughts about the current job security situation.
Most of them feel that layoffs are necessary in order to keep the industry competitive and ensure that companies remain profitable. However, they also feel that the layoffs should not be done indiscriminately.
Some laid-off workers suggest that companies should prioritize their employees when it comes to layoffs. This could mean that companies should consider factors such as performance and loyalty when deciding who to let go. This would help ensure that those who have worked hard and been loyal to the company are not let go.
Others suggest that the tech industry should focus more on job retraining and educational opportunities for those who have been affected by layoffs. This would help ensure that those who have been let go have the skills and knowledge to find new employment in the tech industry.
Some tech workers have also suggested that companies should be more transparent about their plans for layoffs. This would help to ensure that employees are not left in the dark about their job security.
According to a recent CNBC survey among prominent CEOs and founders of some of the top technology companies, showed that job security has declined in recent years, as organizations are now more focused on optimizing the workforce to maximize profits and reduce costs.
Additionally, employees are more likely to be laid off if they do not meet performance targets and cost-cutting goals. The majority of respondents to a survey expressed that layoffs were necessary to reduce costs, but also expressed concern about the impact of job insecurity on employees. They expressed that employees are feeling more vulnerable, which could lead to a decrease in morale and productivity, as well as a decrease in innovation, employee retention, and recruitment.
Overall, the respondents highlighted the importance of job security in the tech industry.
As the Indian technology sector has seen massive job cuts in top startups, for Indian techies the loss is writ large all over the place. But these job cuts are intended to make the companies more productive and competitive and at the same time let them focus on the future.
Technology companies hired aggressively throughout the pandemic thinking the growth will continue and it was a good idea to keep the workforce ready as it becomes scarce in the ensuing competition among technology companies. The additional workforce helped them cope up with people’s increased reliance on digital economy. It also helped them earn billions of dollars of extra revenue. But the pandemic, like all things in this world, came to an end.
But these companies took a good one year or so to understand that the additional hires were unsustainable.
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