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Are 2024 Tech Layoffs Telling The Same Story?

As we mark the end of January 2024, the tech industry has witnessed a significant number of layoffs, with 104 companies releasing 28,970 workers this year alone. This follows a trend from the previous years, with 1,188 companies laying off 262,595 employees in 2023 and 1,064 companies letting go of 164,969 employees in 2022. This article aims to delve into the reasons behind the 2024 tech industry layoffs and how they compare to the trends of 2023 and 2022.

To begin, let’s examine some major layoffs and company announcements from the last quarter of 2023 to January 2024, as reported by Layoffs.fyi:

In the Big Tech sector:

  • PayPal: 2,500 employees
  • Block: 1,000 employees
  • Salesforce: 700 employees
  • Microsoft: 1,900 employees
  • SAP: 8,000 employees
  • eBay: 1,000 employees
  • Wayfair: 1,650 employees
  • Google: 1,000 employees
  • Twitch: 500 employees
  • Unity: 1,800 employees
  • InVision: Closed down (100% workforce)
  • Intel: 311 employees
  • Etsy: 225 employees
  • Spotify: 1,500 employees
  • VMware: 2,837 employees
  • Bytedance: 1,000 employees
  • Chewy: 200 employees
  • Informatica: 545 employees
  • Splunk: 500 employees
  • LinkedIn: 660 employees
  • Qualcomm: 1,258 employees
  • Stitch Fix: 558 employees
  • Juniper Networks: 440 employees
  • Qualtrics: 780 employees

Other notable reductions in companies include:

  • Cruise: 900 employees
  • Invitae: 235 employees
  • Zulily: 839 employees
  • Viasat: 800 employees
  • Faire: 250 employees
  • Olive: Closed down (100% workforce)
  • Convoy: 500 employees
  • Bullhorn: 140 employees
  • Hopper: 250 employees

Planned reductions are also in the pipeline:

  • Bill: 15% workforce reduction
  • Twilio: 5% workforce reduction

While these numbers are stark, they only partially narrate the story. Let’s explore some key factors driving these layoffs:

  • Investment in AI and Automation: SAP’s announcement of a $2 billion investment in AI and restructuring of 8,000 jobs is a prime example. This trend is echoed by Google, Microsoft, Duolingo, and other major tech players. However, the demand for AI and ML expertise remains high, and the shift to these roles isn’t a simple one-for-one replacement, leading to overall reductions in headcount, especially in roles susceptible to automation.
  • Stock Market Influences: Announcements of layoffs by big tech companies often lead to positive reactions on Wall Street, a pattern that has become increasingly common.
  • Challenges in Startup Funding: Echoing Sequoia Capital’s 2022 presentation, ‘Adapting to Endure,’ the landscape for startups has changed, with a focus shifting away from hypergrowth and towards sustainable profitability.
  • Rising Interest Rates: Higher interest rates affect future cash flows, particularly impacting tech companies with limited interest income offerings.
  • Return-to-Office Mandates: While some view these mandates as disguised layoffs, they also reflect changes in management’s stance on remote work, and the need to adjust compensation in line with cost of living considerations, leading to further layoffs.

Despite these challenges, 2024 shows some differences compared to the past two years, as highlighted by Wired:

  • The scale of job cuts has been smaller.
  • Consumer behavior has stabilized post-pandemic.
  • Layoffs appear more strategic, particularly in areas like AI.
  • The overall unemployment rate, especially in tech, remains low.

While the tech layoff news skews toward the negative, the job market in this sector remains robust. Nonetheless, the impact on those who have lost their jobs cannot be understated, and a compassionate approach towards them is essential.

Sources:

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