Mass layoffs in IT industry is an extremely stressful topic for programmers and IT professionals. Is there still something to fear? Is it possible to avoid job loss in tech industry? As we know, it’s impossible to hedge against the recession, but that doesn’t mean we’re all doomed in advance to a wave of layoffs. Lots of our friends, family members and co-workers have been either laid off in the past year, or have had to reduce their teams. The truth is that we have little or no control over when layoffs occur, how they are carried out and whether or not they directly affect us. Being aware of this in practice means that there is no point in worrying about things that are completely out of our control.
Now that we’ve established that it’s impossible to ‘hedge against layoffs,’ let’s consider what the causes are, how layoffs are carried out at technology giants such as Microsoft and Google, and what the main reasons are for people being laid off. After all, knowing the mechanisms that govern staff reductions will allow us to conclude that there is really nothing we can do, so there is absolutely no point in worrying.
Reasons for mass tech layoffs in 2022 -2024
Why are there massive layoffs in IT? Let’s think about it by analyzing the years 2022-2024. As we know, the global pandemic forced people around the world to stay at home for long periods of time. First, it was impossible to meet face-to-face with friends and family, so most people began to use various types of instant messaging. Second, all but essential employees were working from home, which led to increased use of tech services such as Teams and Zoom. And thirdly, being locked at home for so long resulted in an increase in the amount of time spent in front of the screen on social media and streaming services such as Facebook, YouTube, Netflix, Amazon, etc. These companies had to quickly meet unexpected demands and forecasts of continued growth. At the start of the 2020 pandemic there was a brief lull in hiring and IT was said to be slowing down. However, cloud applications usage rapid growth was predicted, too. Starting at the end of 2020, through 2021 and 2022, there was a rapid expansion of the industry and many tech companies were hiring tech workers. This was also reflected in the numbers. According to trackers, by the end of 2020, the largest technology companies, including Microsoft and Google, had increased their number of employees and their assets – by a total of $3.4 trillion.
In 2022 everything began to return to the previous status quo. More and more facilities opened, employees stopped working remotely and started returning to offices. Travelling became popular again, outdoor activities increased, movie theaters saw their highest attendance in a decade. People were fed up with being locked up and communicating through a screen. It was known that the year was bound to be difficult for the IT industry. Layoffs came. This was because it resulted in declines in demand for previously massively used applications. At the same time, the IT companies made a big jump in the development of artificial intelligence. At the end of 2022, OpenAI launched ChatGPT and large technology companies faced two major problems: overinvested cloud infrastructure and a shift toward artificial intelligence. Layoffs in IT industry have become a sad reality for many large tech companies.
The first step to reduce overinvestment was to reduce the number of engineers employed. According to data from layoffs tracker layoffs.fyi, 262735 IT jobs were lost in 2023, a 59% higher number of layoffs than in 2022. The year 2024 also got off to a rough start despite the fact that the peak of last year’s first-quarter cuts has not yet been reached after all. We are, of course, talking about the period from the end of 2022 to the summer of 2023, as the fiscal year ends on June 30. The second round of layoffs began at the end of 2023 and 2024 layoffs continue. It will most likely be related to the shift of engineering talent toward ML and AI. What about layoffs in 2024? We are seeing continued investment in data science, machine learning and artificial intelligence. Recent reports show that the percentage of job listings including GenAI terms in their description has increased significantly compared to the last few years. It is worth noting that although there have been many job cuts since the end of 2022, unemployment rates have not increased, and the job market remains strong and companies continue to hire.
Reasons for layoffs in tech companies: reason one – expense reduction
The first reason is financial. Big tech companies must keep an eye on their income and outgoings. Every employee is an expense, which by definition should be as low as possible. So is tech workforce. If a certain threshold is exceeded, cuts are necessary. With a pinch of salt, it can be said that having a very high salary in IT can prove problematic at such a time. Let’s assume, for example, that an IT employee worked hard in the company, was quickly promoted, received high bonuses. What if, in the face of cost-cutting, the company has to cut its most costly resources? What should the employee do if layoffs are expected? Should not make money when has the opportunity to do so? Or should not accept bonuses and rewards? Of course not! Add the fact that major tech companies value their talent and probably firing people with the right skills is a last resort. What’s more, even if firing well-earned IT employees to save money were to be a common practice, is there anything the employee can do? The answer, of course, is ‘no.’
Layoffs in tech sector: reason two – employees not meeting expectations
The second reason you may find yourself on the recent layoff list is failure to meet performance expectations. If a decision has been made to downsize, the natural step is to lay off those who do not meet expectations first. This is good for the company and fair to employees who are performing brilliantly. If you are one of them because you are performing poorly, you should take steps to improve it, regardless of the current situation in the IT industry. Actually, trying to fix a performance problem when it comes to downsizing with layoffs conducted is the worst time. By then it is most often too late to change anything. It happens that sometimes productivity is below the bar, but each employee should correct this immediately and never settle for being below a certain level. This is not related to layoffs, recession or any other economic conditions. It has to do with values and work ethic. Everyone should be curious about the world, constantly expanding their technical knowledge and skills, learning about new technologies. Living and working with such an attitude, we can basically rest easy – the second reason for layoffs is unlikely to ever be an issue.
Global wave of 2024 tech layoffs: reason three – cutting redundant resources
The final reason for layoffs in the tech companies is the reduction of entire teams or departments in IT companies. There can be many reasons for this – the tech giants teams are not profitable, the incubation period is over and the future forecasts are rather uninteresting. Here it is useful to have some insight into the functioning of your company and its future vision. It happens that, as the data shows, the team does not bring any profit to the company or, worse, contributes to money leakage. If this is happening and the employee knows about it, he or she is likely to want to move to another team or look for other IT employment. Such a move has its advantages and disadvantages. After all, how can one know in advance the detailed business profile and actual direction of the new team? No one who is hiring will admit that their team is not doing well. And if this kind of information was readily available, why didn’t you know about it when you joined your current team? The risk that you will end up in a similar situation some time from now is therefore considerable. If you realize that your team has no future you should think about leaving it regardless of the new round of layoffs.
Is IT and big tech industry a thing of the past? A few words of summary…
Summing up, we have very little control over layoffs. Many employees have already lost their jobs and this is not the end of downsizing. We are even not in the middle of round of layoffs this year. Trying to guess whether it will affect us personally only adds unnecessary mental stress and is not helpful at all. Of course, there needs to be more stability among employees. However, if you’ve already been laid off, will you prepare differently for a job interview during a recession? No. You should always give your best, regardless of the job market situation. If no company is hiring at the moment, is there anything you can do? After all, you won’t force them to create a job position for you and make you an offer! You won’t change the economy, you can do nothing if there is no demand for techs at the moment. On the other hand – would you stop developing your skills because the economy is doing well? No. You should always strive to improve your skills, that’s part of working in the technology industry. So let’s stop worrying and wasting our energy. Instead, let’s focus on winning in life, be curious and continue to expand our skills. The idea is to always be valuable to anyone who needs our help and to our employer. Let’s work on becoming financially independent so that in case of the company announced layoffs we will feel secure until we are on solid ground. Let’s not let things like layoffs, over which you have no control, have a destructive effect on our lives.
