Thousands of tech workers have been given pink slips since the start of the new year, as Silicon Valley's biggest companies make mass layoffs in 2022 and 2023.
Layoffs.fyi, a platform that started tracking tech layoffs several years ago, estimates that about 435,000 jobs have been lost since 2022 and more than 7,500 jobs by 2024. Most notable are big technology companies like Google and Amazon. It recently announced it would cut hundreds of employees from various departments.
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But Christopher Kayes, a business professor at George Washington University Business School, wasn't surprised by this.
“I think big technology companies are still employers of choice, but they are no longer considered lifetime employers,” Kayes said, adding that these companies are losing their long-standing reputation as stable employers. It suggests something.
“I think this is a trend that we're going to see over the next few years.”
Why the tech industry is cutting jobs
Big tech companies have been losing jobs for years now as they overspent and overhired during the coronavirus pandemic in anticipation of profits that would never materialize.
Amazon is cutting hundreds of employees at its Prime Video, MGM Studios and Audible divisions as it overhauls its business operations, according to internal documents obtained by Forbes. And live streaming platform Twitch (also owned by Amazon) is cutting its staff by 35% in an effort to “right-size” the company.
Google recently announced that hundreds of employees will be working on core engineering, Google Assistant products, and hardware such as Pixel phones and Fitbit watches to “responsibly” invest in the company's “biggest priorities and important opportunities ahead.” fired several employees. His language app Duolingo is also reportedly cutting 10% of his contract workforce as it moves to make more use of artificial intelligence in content generation.
Kayes said he expects the industry could see about 100,000 layoffs over the course of the year, saying the industry is in a correction phase and is looking for ways to cut costs and maintain profit margins. Ta.
“Companies like Google and Amazon are, to some extent, struggling to redefine their business models,” Kayes explains. “The old way of doing business doesn't work the way it used to, and we can't grow at the pace we've had over the past 10 years, for example.”
Kayes points to Google as an example, saying that, like many users, he has found search engines increasingly flooded with ads.
“They're really thinking about how they can squeeze all their ad spend into eyeballs on the screen. That means to me the old business model…is no longer working and it's not sustainable.”
Another problem many businesses are currently grappling with is the lack of access to “cheap money” or low-interest loans and loans, Kayes said.
This, in turn, slows growth, as companies can't burn through cash as much as they used to.
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Is it possible that high-tech workers will start leaving big tech companies?
Kayes believes there is still ample demand for technology workers, but major employers are increasingly wary of the volatile job market and their ability to attract and retain employees in the future. He points out that more efforts may be needed to achieve this goal.
A 2023 study by Handshake, a university career networking site, found that interest in big tech companies may be waning. Searches for major technology brands decreased by almost 15% for 2023 graduates compared to 2022 graduates.
Christine Cruzvergara, Handshake's chief education strategy officer, told Insider that recent graduates are prioritizing career stability as they watch large tech sector layoffs unfold. .
Kayes also said big tech companies could follow the same path as banks and consulting firms, where employees could work there for about three years, put that experience on their resumes and move on to another employer. I think there is.
However, there is a bright light at the end of the tunnel. Kayes is seeing industry workers becoming more open to other types of organizations, such as government, health care, defense, and smaller, under-the-radar companies.
According to LinkedIn's 2023 data, nearly two-thirds of tech workers who left the company took jobs outside the tech industry.
“I think we're seeing an almost democratization of the technology workforce across a broader range of industries and types of companies,” Kayes said.
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