Maybe you’ve noticed it in the news, but it’s far bigger than Twitter and Elon Musk’s tweets. After expanding staff sizes for years, many tech companies have announced dramatic layoffs in recent months. What’s driving the downsizing? Certainly the risk of an economic contraction fueled fears, but the cutbacks are more complex.
First, the COVID-19 pandemic reshaped the structure and makeup of the tech industry. As COVID closed borders and social distancing became the norm, reliance on digital services surged. Amazon, for example, saw sales spike and responded by expanding services like same-day delivery. Staffing was bolstered to develop and expand digital services and otherwise meet demand.
Now, underperforming projects in tech are on the chopping block. In November, Amazon laid off roughly 10,000 tech and corporate employees.
Inflation and interest rates have played a role, too, since borrowing has become more expensive.
In some cases, employees are being shifted to new roles within companies while underperforming services are cut. But with the labor market remaining tight through the end of 2022, many employers still want to hold onto talent. The upside to this is studies found that roughly 75 percent of laid-off tech workers found new jobs within three months.