Despite the tech industry’s notably low unemployment rate—paired with strong employer demand for all kinds of tech skills—dozens of tech companies have announced layoffs in recent weeks. Still others have announced hiring slowdowns at least through the end of the year. What’s going on here?
For companies in sectors such as social media, the cuts and hiring slowdowns are driven by a combination of slowing revenues, fears of inflation, and the need to conserve cash for big strategic initiatives. In their quarterly earnings reports and other corporate communications, Snap and Meta (formerly Facebook) have called out Apple’s stringent privacy policies for the iPhone, which have limited social media companies’ ability to leverage user data for ads. In Meta’s case, hiring freezes and slashed perks are also a reflection of the company’s decision to reorient its spending toward the “metaverse,” or the ecosystem of augmented reality (AR) and virtual reality (VR) apps that CEO Mark Zuckerberg sees as the future of tech.
At other companies, the recent layoffs are part of a strategic correction after years of exuberant growth and spending. Netflix, for instance, sees slowed revenue growth in its future, leading it to constrain costs—and that, unfortunately, has translated into staff reductions.
These problems aren’t existential; streaming and social media, for example, are basically licenses to print money. But the current market turbulence has led some startups to make significant staff and spending cuts in order to survive. VC funders such as SoftBank are pulling back on their investments, leaving some startups stranded. In the crypto space, which has taken some hard hits as the price of some coins has spiraled down, there’s even talk of another “crypto winter” setting in.
Here’s a breakdown of recent tech layoffs, courtesy of layoffs.fyi, which crowdsources its data:
Let’s never forget that, at the most fundamental level, layoffs impact people. A layoff is often a devastating event, especially if you were emotionally invested in the company’s mission. It can take significant time to recover and figure out what to do next—and that’s absolutely okay.
At the moment, the tech unemployment rate stands at 1.7 percent. Wages for technologists continue to rise, a reflection of companies’ intense demand for everyone from software developers to data scientists and mobile app designers. While the outlook for certain companies and sectors is gloomy at the moment, the hunger for tech talent remains widespread. There’s lots of reason for optimism.