[Layoffs 2023 UPDATE] Why are Big Tech Laying off?

 

In the tech industry, it seems like there are new rounds of layoffs every week. It began early this year with smaller, developing businesses that needed to closely monitor their continuous spending, and it has since spread to giants in the sector like Meta and Amazon.

Just last week, it was announced that Amazon intended to fire a sizable 10,000 workers. This comes after Elon Musk ran a continuous revolving door at Twitter and Meta fired 11,000 employees last Friday.

The companies that have incorporated many other well-known brands like Uber, Airbnb, Zillow, Coinbase, Netflix, Spotify, Peloton, Shopify, Stripe, and Robinhood could be included more quickly than those that have not.

A website that records layoffs across the industry was even created as a result of the constant firings.

But why is this taking place? Why are so many tech businesses, especially those that are still making substantial profits, laying off so many workers?

Although the specifics will vary from firm to company, there are a few overarching trends that are having an impact on Silicon Valley and beyond.

Netizens Tech is a website and app development company in India that is examining the situation and we think these are the main three reasons why the big tech companies are laying off. 

Top 3 Reasons For Lay-Offs In The Big Techs 

1) The Pandemic Hiring Frenzy

This significant round of layoffs is, in many respects, a correction for an earlier error. Our online lives ended up being our only ones during the epidemic years. There were no Saturday night bars, no commuting to work, pick-up basketball games, or dance recitals.

We were all compelled to stay at home, which resulted in more internet time. Online shopping has developed into the only retail outlet, not merely a growing one. Netflix, Amazon Prime, and other countless streaming services have replaced not only the movies but also dining out, lunch breaks at work, and dating nights.

Despite the upheaval in the world, this increase in internet activity was beneficial for tech firms. They generated record income, which led to record profits and an upsurge in employment that resulted in high wages and benefits for engineers, developers, and other IT professionals.

Many tech firms thought this was the start of a new normal. The world's office workers almost all switched to working from home, which resulted in a significant change in how we lived.

Tech businesses employed in line with their expectations that this transformation would become permanent. They developed new teams, grew swiftly, and extended their existing ones. This was made worse by the requirement for built-in redundancy in major businesses.

2) The Post-Covid Reality

Yes, working remotely has gained a lot more acceptance. Today, a lot of office professionals have flexible work schedules that allow them to work from home occasionally.

But hybrid work has also grown significantly in popularity. Many employees (and employers) desire some time at the office for teamwork, idea sharing, and developing a corporate culture.

We've moved past the days of having every meeting hosted automatically online, even though tools like Zoom and Google Meet are still widely used.

The situation is significantly worse away from work. Life outside of work is quite similar to how it was before the pandemic in many aspects. Weekend sports have begun, bars and restaurants are once busier, and vacations have returned.

After two protracted years of sobriety, many people are even more fascinated in these things.

The final outcome? Too many individuals were hired by tech companies. And they are highly skilled software engineers and developers earning low to mid six figures, not part-time administrative assistants making $10 an hour.

Not to mention the comprehensive package's excellent benefits, amenities, and even stock options. Redundancy requires some overstaffing, but it's obvious that in many businesses, it's gone too far.

3) The Economic Situation And A Potential Recession

If tech had strong growth potential, this issue wouldn't necessarily be a huge worry. If you've merely employed them a little too early, having too many employees is not a problem.

Although it's not ideal, having the roles on the books a year in advance won't break the bank for businesses like Meta or Alphabet if you plan to hire for them in 6 to 12 months anyhow.

The problem is that the immediate future doesn't seem all that promising. The United States appears to be entering a recession, as has been reported for months. Elon Musk, Mark Zuckerberg, Jeff Bezos,, and many others have joined Coinbase CEO Brian Armstrong in criticizing it recently. Armstrong was one of the first to do so.

Fewer consumer purchasing and, more significantly for many internet companies, lower advertising spending would both result from a recession. This was clearly addressed by Meta on the most recent Q3 earnings call when they said they anticipated Q4 and early 2023 advertising revenue to be less robust than it has been.

Tech companies must limit their investment in light of these impending challenges in order to survive the uncertain period without incident.

Conclusion, 

The above reasons clearly state the reasons why there is a serious layoff happening during the year and in the coming time, there will be more and more happening. But there is also a new reason that is emerging with AIs and Google also declaring that they are also coming up with their own AI platform that will also lead to more layoffs.