It is a turbulent time for the job market of the tech industry. Many companies’ demand for workers in this sector has changed drastically over the past few years. In 2020, various tech industries took part in hiring sprees in response to the surge in consumer demand for digital goods and services that skyrocketed due to the pandemic. Additionally, many companies hired new employees on a full-time salary instead of on contract.
A prime example of a company that did just this at the beginning of the pandemic was Sea, a global consumer internet company based in Singapore. This tech hotspot hosts 80 of the top 100 tech companies worldwide. Sea increased its workforce by 99.1 percent from 2020 to 2021. However, the necessity of these workers could have been more lived. Sea laid off 7,000 workers in over six months through three separate firing waves in June, September, and November of 2022.
Singapore is only one of many countries with tech industries currently cutting their workforce, with another big country being the United States. While overhiring is a common reason for layoffs, many other factors contribute to these mass layoffs. For example, mergers have also played a role in job cuts. At the end of October, Elon Musk acquired Twitter, a social media company based in San Francisco, California, valued at over 35 billion U.S. Dollars. Within the first few weeks post-merger, Twitter laid off 50% of its workforce. The cuts aren’t stopping there. It is predicted that 50 more people will be fired within the next few weeks, which would bring the total global headcount of workers in the company to less than 2,0000.
In contrast, many companies are also laying off workers due to their lack of profitability. For instance, SAP is a multinational software company based in Germany currently pursuing this plan. Their net income dropped 68% in 2022. In response, they have taken a non-performance-based approach to layoffs, impacting 2.5% of their workforce or 2,800 employees worldwide. Even companies on track in their profitability, such as XShore-a boat manufacturing company based in Sweden, are taking a similar approach and decreasing their staff to reach the profitability goals sooner.
Additionally, The World Bank forecasts the global economy’s growth prospects to fall to as little as 1.7% for 2023. Therefore, many companies, Google and Microsoft being the most notable, are taking the layoff route in response to their fear of a looming recession. Building off of this, this could cause a cycler effect, as unemployment and recession usually go hand in hand. The overall market demand typically decreases when there are significant increases in unemployment due to demand declining due to a decrease in consumer buying.
It is also essential to consider that the supply of tech workers continues to grow. The tech industry is a lucrative sector. Many people pursuing a tech industry field post-graduation are doing so because, on average, workers in this industry make significantly more money than workers in other fields. Students typically want to make as much money as possible as soon as possible once they graduate, and therefore many students choose to pursue a tech-related degree.
So where does this leave the mass of tech talent? The outlook is surprisingly optimistic. The tech industry, as a whole, is still in high demand for talent; there will be a redistribution of the labor supply throughout the sector. Most job dismissals are from large corporations because, historically, tech laborers prefer to work for larger companies. With the increasing competitiveness for jobs at these large corporations, more people will shift to working for startups or companies that are not specified in the tech realm but need technological innovation to increase their profitability.
While these significant layoffs may appear scary at first glance, this is untrue. The tech industry continues to grow exponentially, and tech workers are and will continue to be of the utmost value.