By Kasey Hall
Over 140,000 tech workers were laid off in 2022, and so far in 2023, we have seen more than 94,000 jobs cut, ranging from tech start-ups to “Big Tech.” In fact, the tech industry has seen its highest number of layoffs since the dot-com bubble burst in the early 2000s. These layoffs have been all over the news and social media, with many younger generations questioning the sustainability of a career in tech.
In the past, tech companies had prioritized a “growth at all costs” mindset that meant profitability was viewed as a mere afterthought. Sanjay Brahmawar, the CEO of the enterprise software firm Software AG says, “for years companies have said “let’s just keep growing and we’ll figure out profitability somewhere down the road.” Since 2011, the tech industry has been growing year after year with explosive growth occurring after the pandemic. In 2020 and 2021, sales sharply rose as new work-from-home orders put a heavy demand on tech companies, and more people and businesses relied on these technologies than before. During the pandemic, tech hiring became progressively more competitive, with companies increasing pay packages and benefits across the board. For instance, Amazon more than doubled its corporate staffing, and Meta doubled its employment headcount between March 2020 and September 2021. This record-setting growth, however, could not be maintained forever, and we are currently experiencing a significant course correction triggered by an economic slowdown.
For a while now, investors were willing to let these tech companies spend needlessly so long as the share prices continued to grow by double-digits year after year reliably. However, as internal costs rose and spending slowed, many companies faced shrinking profits and alarms from angry investors calling for a significant reduction in expenses. The “growth at all costs” era seems to be ending for “Big Tech. Investors are instead shifting the focus towards profitability and efficiency, describing this as the “new normal” for tech companies.” So, is this “new normal,” led by investors, to blame for these tech layoffs? Michael Cusumano, deputy dean at MIT’s Sloan School of Management, believes that “these massive tech layoffs have more to do with investors than companies’ bottom lines. “
As record-breaking growth is no longer feasible long-term, investors have instead set their sights on curbing expenses and are beginning to evaluate tech companies more harshly. This means that the mass hiring of high-skilled professionals during the pandemic, with sizable salaries and pay packages to match, are the first to be cut as tech companies look to reassess their balance sheets. All this has been done in an effort by tech companies to signal to investors that they are willing to focus on long-term growth by showing more fiscal responsibility in the short term regarding staffing. This reorganization of tech companies likely caused these industry-wide layoffs. However, they should not signal absolute doom to those interested in the industry’s success. Instead, these tech layoffs could indicate that the “industry is maturing or becoming more stable after rapid growth” and that these tech companies are invested in a more sustainable path forward.
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 Hetler, supra note 2.
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 Forbes, supra note 7.
 Hetler, supra note 2.
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