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Why So Many Tech Layoffs Lately?

It seems that big tech companies are starting to lay off thousands of employees lately. Why could that be?

Image by ArthurHidden on Freepik

Most media outlets are making a bigger deal out of it than it is. The number of layoffs reported recently might seem high, but it does not compare to the number of hires big companies have made during and after the pandemic. The reasons behind this hiring frenzy might be more sketchy than you think.

Article Summary

Big tech companies have started laying off a considerable amount of people in recent months, sometimes in the order of thousands at a time.

While most media is trying to paint it as proof of the downfall of big tech, the main reason behind it is a combination of bad management and impulsive hiring caused a surge in the usage of their platforms.

How it started

During the pandemic, the tech industry has experienced a boom. With so many more people at home all day, media apps and social networks have seen a hefty increase in usage. Traffic on all popular online platforms has increased. This incentivized companies to invest more in their services.

Stores have gone online, with billions in investment to make their online platforms better than the competition, as more and more people are shopping online.

At a point, it seemed like all tech companies were recruiting constantly and in great numbers. But then people started going outside, and the demand has decreased. So now, they don’t need as big a workforce as they previously thought.

People make it look bleak, but just a fraction of the workforce added during the booming months was laid off. Tech companies of all sizes are experiencing higher than usual traffic, apart from their initially projected growth.

Tech workers are not enough still. Many companies want to hire qualified personnel and have a hard time finding the right people for their teams, mainly because those they would prefer are working at other companies.

I’ve seen progress stagnating for companies that struggle to find the right employees. Some cannot start working on new big projects because of staff shortages.

The tech industry moves fast

With the “move fast and break things” mentality behind most players in the tech industry, it’s no wonder stories like these come up.

Everybody wants it done now, and they forget about the process. There are numerous stories online about people hired without having a project to work on. Can you imagine hiring people before you think of the project?

This is not a critique of the tech industry because I understand their urgency and that they know it’s hard to find the right people to work on your projects. I would argue that this could be the most difficult thing about a successful project in these times when things change so fast.

Another reason is that tech companies find it easier to get investment. Most investors nowadays are looking for investment opportunities within the tech space which when successful, can prove productive, meaning they make a lot of money.

The layoffs are fast and numbers are high

When a tech company fires people, they do it fast and in high numbers. It might look like a crisis, but there are good reasons for it.

They fire people overnight to avoid dealing with a sour employee who could cause a lot of damage to the company if they keep having access to the company’s resources. It happened a lot in the past, especially with tech companies, where just one command in a console could cause lots of damage.

The main reason for firing people in such great numbers at a time is to reduce anxiety among those remaining. They make it a habit to lay many people off at the same time.

On the other hand, if they were to fire a small number of employees daily, this would cause everybody in the company to worry about their roles. The way they do it makes things clear, and everyone can get back to doing their job rather than sitting and thinking if tomorrow is their turn.

Another reason to fire many people at the same time is explained by projects shutting down. When a big company scraps a big project, all the people working on the project (sometimes thousands) can get laid off.

It looks worse than it is

Even if big tech employees get laid off so fast that they find out about it after being denied access to the company’s resources, they receive all their benefits. They are not going to work anymore to protect the company.

That does not make it right. Companies hired them without planning, and they now pay the price. Well, it rarely is fair with big companies considering the number of people they employ.

The worst part of the recent layoffs

The reason big tech companies are not laying off so many employees is because they stopped making money, as they are making more money than ever. The main reason behind the recent waves of layoffs from big tech companies is a lack of planning.

I know some people have left decent jobs to go and work for them, becoming victims of the impulsivity of a big company.

I understand it’s hard for so many people, but demand increases for smaller companies, where they will have a better chance to make an impact than they could have made working for a big tech company.

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