Explained: Why are tech giants laying off a mass of humanity?

ldquoI found out that I am one of the 10 per cent impacted by the Salesforce layoffs announced in January Irsquom certain that everyone who has received similar news has their own private battles to overcome As for myself this involves being able to continue working in a country that I now call my second homerdquo shares Jayant Dutta an Indianorigin worker who recently got laid off by Salesforce in the USIn what could be touted as the worst month ever for the tech industry close to 1 lakh employees have been laid off in the month of January globally The tech giants leading the mass wave of layoffs are Amazon 18000 Microsoft 10000 Google 12000 Meta 11000 HP 6000 and Twitter 3700 barring AppleAccording to TheLayoffcom a layoff tracking website more than 3300 tech employees lost jobs daily on average by more than 288 companies worldwide Now joining the ongoing layoff season is Salesforce which sacked 7000 employees slashing 10 per cent of its entire workforce as it announced last monthMidday Online reached out to citybased economists and tech heads who break down the mass firings that are wreaking havoc in the technology sector Samie Ahmad a professor at Narsee Monjee Institute of Management Studies says ldquoThe sacking episodes have gained pace amid the global economic meltdown and weak investor sentiments that could topple into a recessionrdquoThe real reasons for the big tech layoffsOverhiring during the pandemicldquoThe tech sector is a case of exponential growth owing to perpetual capitalisation on the rising trends Hence its peaking performance during the workfromhome revolution did not surprise market researchers and analystsrdquo said Ahmad The Covid19 pandemic led to a rise in demand for products like video conferencing applications UI and UX designs and other project management toolsWith the increased demand came the bloated hiring campaigns to compensate on the supply front This led to an employment spree with fat paychecks on a global level Tech giants like Amazon and Meta doubled their worker count in a matter of months leading to overhiring during the pandemic However three years into it the products began to mature with no steep development required now Thus companies have started reducing their headcount to adjust to the present timesWhat followed was a rough 2022 when big tech firms began bleeding workers left right and centre Sundar Pichai pointed out this in the letter he sent to employees after announcing the termination of 12000 people He said ldquoOver the past two years wersquove seen periods of dramatic growth To match and fuel that growth we hired for a different economic reality than the one we face todayrdquoIn the mood for RecessionCitybased tech head Rajeev Karanth shares that the market slowdown due to panic over a possible recession coupled with the big blow to tech companiesrsquo stock prices last year has made ldquoefficiencyrdquo a new concern for tech CEOsGaurav Gupta the technology head at Indiarsquos prominent fintech company name undisclosed adds ldquoAmid widespread rumours regarding the global economic slowdown we are reassessing our budgets to align with a potential recession Our economic advisors have released a cautionary statement impending a global recession in 2023rdquoThe World Bank and International Monetary Fund IMF have already cautioned economies to brace up for an economic slowdown in the face of growth A majority of the World Economic Forums Community expects the RussiaUkraine war to continue to affect the global economy and anticipates further monetary tightening across the worldRise of restless investorsTech companies are facing a myriad of challenges since the past financial year slipping into the next Rising interest rates combined with inflation over the past year have staggered technology shares leaving advertisers with tight budgets and a rollback on online advertisement spendingGaurav adds that hikes in global interest rates in particular have led to a loss of appetite for Big Tech company shares The bleak macroeconomic climate has in turn piled pressure on fund managers and early investors in big tech to make quick decisions for countering the slowdown in the growth of the tech sectorIn October last year Metarsquos founder and CEO Mark Zuckerberg received a letter from Altimeter Capital Chair and Chief Executive Brad Gerstner who suggested a lean working structure and streamlining of operations The letter read ldquoLike many other companies in a zerorate world mdash Meta has drifted into the land of excess mdash too many people too many ideas too little urgency This lack of focus and fitness is obscured when growth is easy but deadly when growth slows and technology changesrdquoFlattening growth of the tech sectorAhmad comments ldquoThe tech sector has grown rapidly over the past three decades and experts are of the opinion that the recent job cuts indicate the maturing of the tech sector after a period of hypergrowthrdquoSatya Nadela resonates with this theory in the letter he sent to employees after announcing the layoffs of 10000 people at Microsoft The letter read ldquoWersquore living through times of significant change and as I meet with customers and partners a few things are clear First as we saw customers accelerate their digital spending during the pandemic wersquore now seeing them optimise their digital spending to do more with lessrdquoldquoLayoffs are hard When we work we create a very high plan and ambitions with the company We have taken a house loan a new car and a lot on the dream of future stock valuation And suddenly one day our emails started bouncing we had difficulty logging in and our badge stopped workingrdquo posted Shivi Tandon on her LinkedIn after she received her pink slip from AmazonBraving the layoff seasonTo cope with the catastrophic mass layoffs Ashish Modani the founder at SLA Finserv Private Limited takes us through ways to brave a layoff1 Update your resume and LinkedIn profile and actively search for job openings in your field or related fields2 Consider taking online courses or upskilling to make yourself more attractive to potential employers3 Network with friends family and professional contacts to see if they know of any job openings4 Utilise unemployment benefits if you are eligible5 Seek support from friends family or a support group if you are feeling overwhelmedIn the future it is advisable to have a contingency plan in place in case of job loss such as having an emergency fund saved up or considering freelance or gig work options It is also important to stay updated on industry trends and continuously update your skillset to remain competitive in the job marketThe current ongoing global layoffs can be seen as a result of the VUCA environment we live in The Covid19 pandemic has significantly impacted the global economy leading to increased Volatility Uncertainty Complexity and AmbiguityThis is a commonly recommended guideline to help manage debt and maintain financial stability By keeping debt payments below 25 per cent of your takehome income one can ensure that they have enough money to cover other expenses and have some savings However its important to keep in mind that everyones financial situation is unique and what works for one person may not work for anotherAvoid making impulsive purchases that are not necessary Its important to have a balanced approach to spending and saving so that you can achieve your longterm financial goals while still enjoying lifes pleasuresAlso Read Toxic work culture Humiliation at workplace is driving employees to quit