Big Tech layoffs are here to stay in 2024
The once glamourous and sought-after Big Tech jobs are now facing continuous layoffs and cutbacks, leaving workers questioning their next employment strategies.
Up until recently, Big Tech companies, such as Amazon, Google, and Meta, were considered some of the most desirable jobs available, offering workers huge salaries, lavish perks, and the prospect of being a part of global innovation. But since the recession following the height of the Covid-19 pandemic, there have been major layoffs in tech companies as a result of an uncertain economy.
In 2023, Big Tech companies made many job layoffs. According to CNBC, Amazon cut 27,000 employees, Meta cut 21,000, and Microsoft cut 10,000 between late 2022 and early 2023. Those numbers have only increased entering 2024: 207 tech companies have participated in job layoffs, with more than 50,000 employees being laid off as of 2024.
Before the layoffs, tech companies were renowned for their advanced and efficient workplace culture and employee benefits toward service and learning goals. However, as the global economy experienced yet another major turndown around 2022, coupled with climbing inflation and interest rates, tech companies made a significant shift away from having a high hiring demand in 2020-2021. Now, they are pulling back on recruitment and are cutting existing employees to stay financially afloat following the pandemic recession, completely shifting employees’ career trajectories from one extreme to another.
The after-effects of the pandemic are not the only factor affecting the massive layoffs. Through layoffs, tech companies can manage larger amounts of profit to then diversify into other financial sectors that are sure to generate profit. Jeff Shulman, a professor at the University of Washington’s Foster School of Business, told NPR that tech companies are also participating in large waves of layoffs because “the layoffs seem to be helping their stock prices, so these companies see no reason to stop.”
For smaller companies, such as start-ups, the cash flow income rates are at a low and force them to reduce their team sizes, while larger firms submit to layoffs as they aim to satisfy investors and increase stock value. “Workers are more comfortable with it, stock investors are appreciating it, and so I think we’ll see it continue for some time,” Shulman adds. Big Tech companies can lay off many employees as other companies are doing the same, and with the limited profitability and rising interest rates, sudden and drastic layoffs across the industry are no longer seen as a shock but understood as a new cultural norm in the tech corporate world.
The disconnect between tech corporations and employees thickens as technologies, such as artificial intelligence (AI), continue to grow at high speeds and produce significant advances in workflow capability and efficiency. Instead of spending resources on hiring individuals, which imposes long and tedious recruitment processes, tech companies are spending billions on AI software systems that they believe could save on current hiring resources and grow to be worth trillions. According to the New York Times, Mark Zuckerberg, chief executive of Meta, told analysts in a call that his company ignited major layoffs and control costs this past year “so we can invest in these long-term, ambitious visions around AI.”
Major layoffs as a way of promoting and introducing a workplace system redesigned by AI is not a pattern that is exclusive to big tech companies like Meta. As these companies scramble to keep up with consumer demand and high costs, many continue to work with online work-from-home systems that emerged during the pandemic. Tech companies have realized that the need to have individuals physically present in the office and to allocate resources and software their employees need at the office are diminishing, as the same amount of work or even more can be completed conveniently and more effectively from their employees’ homes.
Tim Herbert, CompTIA’s chief research officer, told the New York Times that these cycles of high job market demand and simultaneous job layoffs are a necessary part of the economic cycle. “We go through these cycles where you see this intense focus on innovation and then the pendulum swings and there’s an intense focus on the bottom line.”
There is no clear trajectory for how many job layoffs are likely to occur due to rising costs, the increasing demand for new jobs, the relationship between stock prices, the emergence of AI, and the companies’ ability to stay financially afloat with the external impacts of an economic recession. However, based on the recent results from the past few years, the number of job layoffs seems to be increasing.
The entire technology sector is experiencing a downward shift, making way for a newly developed workplace culture with innovative systems and technology. As tech companies try their best to maximize their profits and value, employees are struggling to keep up with the trends in the industry. It is interesting to see what the world of technology is going to look like next for employees and students who are aspiring to land a job in the industry.
