Tech Layoffs: the Full Breakdown
In light of events that have been happening since autumn last year across all tech companies, layoffs, I’ve decided to publish an article that gives an insight on the reason for “Why are they firing this many people?!” as well as suggestions on how to handle being laid off or seeing your friends/colleagues get laid of.
It is a long detailed and thorough read so please bear with me.
Daily updated numbers: https://www.trueup.io/layoffs
Why are tech companies laying off people?
There can be a couple of reasons for this:
- Over hired: Technology companies performed extremely well during COVID due to the shift to online working and learning. Many companies expanded their workforce significantly during this time, under the assumption that the explosion in need for technology that happened during COVID would continue afterwards. But in many cases this turned out to be less true than they expected, so they hired more workers than they could profitably support, and are now correcting to an appropriate level.
There is another representative view below on how they got into this situation, it may just be that companies pushed short term rapid growth over long term stability.
Credits: www.trendlinehq.io
2. Recession: The post-COVID economy has behaved extremely oddly, with simultaneous high inflation, continued supply chain issues, wage growth, low unemployment, etc. There is an expectation that consumer spending will substantially reduce causing a recession, which will negatively impact the earnings of most companies.
The technology industry is historically faster to act to changing conditions than other industries, as reacting quickly is a competitive advantage. Thus many companies are acting based off their assumptions of coming economic difficulties, and reducing staff expenses is an attempt to remain profitable despite a potential reduction in revenue.
They might also have access to a lot more data that we know, being able to better predict certain circumstances. ( it’s just a supposition so take it as such)
Eg. Amazon can see if people are spending more on their groceries or have cut back on some unnecessary sweets or guilty pleasures.
3. Stock Market: The post-COVID stock market has had particularly negative sentiment for technology companies, with the tech-heavy NASDAQ down -22% over the last year compared to -12% for the broader S&P500. This obviously makes their investors unhappy, as an investment in a tech company has recently been worse than an investment in a non-tech company. Thus tech companies are acting to bolster investor sentiment by reducing costs, which will make them more profitable in the near and mid term.
4. Copycat Behavior: as per Jeffrey Pfeffer, a professor at theStanford Graduate School of Business: “about how the workforce reductions that are happening across the tech industry are a result mostly of “social contagion”: Behavior spreads through a network as companies almost mindlessly copy what others are doing. When a few firms fire staff, others will probably follow suit.”
Anoter valuable excerpt from the article: ‘Academic studies have shown that time and time again, workplace reductions don’t do much for paring costs. Severance packages cost money, layoffs increase unemployment insurance rates, and cuts reduce workplace morale and productivity as remaining employees are left wondering, “Could I be fired too?” ‘
5. Minimising Operational Costs
While not all companies acknowledge this it does make sense from a capitalistic point of view to always look for the cheapest and best workforce out there.
That’s why major companies produce hardware in South-East Asia, it’s cheap, the trick is to get the right balance between efficiency and spending.
It doesn’t matter how cheap you can produce it if only 50% meet standards. I am sure they will get there but not in the near future or as fast as they expect.
https://9to5mac.com/2023/02/14/iphone-casings-produced-in-india
How do massive tech layoffs usually happen?
You’re going to think I’m bullshi*ing but reality is always worse than fiction, this is how it happened to all the major players on the market: Meta, Amazon, Google, Microsoft, Salesforce etc, and how it’s best to do it. (Don’t kill me just yet.)
- You get an email on your personal address notifying that your contract has been terminated. They explain the various reasons, your jaw is on the floor and you think it might be a PHISHING email.
- You try to access to company owned assets only to find out that your office access was already removed.
- You are not notified in advance which makes the situation even more terrifying.
- You’re simply without a job starting then.
- Doesn’t matter that you were driving to work or on vacation.
Like ripping a band-aid?!
Well to put it in plain terms, if you’re re about to layoff hundreds of employees, without proper warning, some employees who probably have access to all your critical infrastructure or to sensitive data it’s better to do it fast and quick so they don’t act in the spur of the moment, seeking revenge.
Thus reducing potential impact to zero. Long term we’ll see.
Please note that massive layoffs are a coordinated event, indifferent of timezone, role, position, sex so it has to be done that way that protects the company.
The reason behind it will never justify the means nor the actions.
How to handle being laid off?
If you are in this situation please let me say that I am sorry and I am confident it wasn’t your fault.
When part of massive layoffs it’s not even up to your direct manager to decide who gets fired and who stays, it’s usually at C-level ( chief executives), looking from a long term perspective only focusing on job roles and responsibilities, not individuals.
Be calm.
If you start crying, screaming or simply lashing out it won’t do you any good.
Be respectful.
If you start screaming at HR, again it won’t help and most probably they are just the messenger .
Be courteous.
Yes, you still have to uphold and present yourself on the highest standard.
Be prepared.
to negotiate your severance package.
Take a break
I know it sounds crazy, after just being laid off however it is a shock, you need time to digest what happened, to regroup and get back on your feet!!
Reach out
Don’t be shy, no need to go hide under a rock even though that’s how you feel.
It’s not you so don’t be scared to reach out to former colleagues, to others in the same situation.
How to preemptively prepare?
Even if the likeliness of massive layoffs getting fired is quite low as most companies (except Twitter), have only fired aroubd ~15% of their workforce usually in areas that have not been growing as expected, areas where they have over hired, areas in which they don’t expect to meet returns or simply areas that don’t have that much immediate impact (HR/Research), it is always a good idea to:
Have your CV up to date
Keep your LinkedIn profile up to date
Research the market occasionally, see what other companies are offering, of they’re hiring: where, what, when
Check out your salary range, as previously mentioned in other articles, DYOR, and know your worth
Read the news : macroeconomic factors such as chip supply shortages, wars, pandemic, recession can have a knock-on effect on the job market.
If you are from Romania 🇷🇴, Netherlands 🇳🇱 or Spain 🇪🇸, feel free to use the news aggregator I created during the pandemic.
Cash savings: have 6 Months worth of savings in cash; this is not a personal recommendation, is a general rule of thump that any financial advisor will give, same as the 20–30–50 rule of spending your salary.
Never stop learning, growing, improving yourself: even when faced with such dire circumstances keep in mind that it’s not the end of the world; yes, the sky has fallen on top of you, but you will bounce back, it’s just a setback!
In order to be more confident on your strengths and skills it’s always a good idea to keep grinding, it’s a good idea to always get involved, to reach out, to help others.
Ok, ok.. let’s say you do eventually get fired after listening to my advice, however you will have a conqueror mindset, money in the bank, a lot of relations and most probably ahead of the game.
If you’re looking for inspiration I have a full list over here:
It’s never a bad idea to have the best version of yourself!
CONCLUSION:
Keep in mind that you alone are responsible for all your actions, situations in which you might end up( the good and bad), decisions, your failures and your success.
Eg: if you feel like your project is a dead end, don’t rejoice, change it for the better!
I am 100% confident that if you put in the work, the hours, the blood, sweat and tears, nothing can stand in your way.
No challenge is too great and nothing is impossible. With enough time you will do anything you want.
Finishing with the pep talk and coming back to the main topic, tech layoffs happen for a number of reasons, they are brutal but not the end of the world, you might be able to beat them but even if you don’t just stay calm and make the most out of it (negotiate!).
Bogdan Tudorache | Founder @ berrynews.org
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