The tech industry, once a beacon of job security and ever-climbing salaries, is facing a new reality. Layoffs in the sector have become a common headline, with the current wave of job cuts being second only to the dot-com bubble’s burst. In the past year, the need to economize, driven by inflation and a hiring spree during the pandemic, has been cited as the primary cause. But as we delve into this year, the rationale seems less clear, especially given the significant cash reserves many of these firms boast.
Since the year’s start, 209 tech companies have laid off 50,312 employees, a staggering number that follows last year’s trend where 1,191 tech companies parted ways with 269,180 employees. The layoffs aren’t confined to startups; tech giants like Alphabet, Amazon, Cisco, eBay, Meta, Microsoft, SAP, and Unity Software have all reduced their workforces. PayPal’s announcement of a 2,500 job cut, which is nine percent of its workforce, is a testament to the scale of the downsizing.
The figures from Challenger, Gray & Christmas offer a slight glimmer of hope, showing a 55 percent decrease in sector cuts from January-February 2024 compared to the same period in 2023. However, the numbers are still grim, with Layoffs.fyi reporting 28,218 cuts in the first two months of 2024 alone. This has led to a highly competitive job market, with many tech workers finding themselves compromising on stability, work environment, or pay and benefits.
The stagnation of tech salaries adds another layer of concern. Comprehensive.io, a compensation tracker, indicates that while tech jobs still pay relatively well, the once robust salary increases have halted over the last two years. An entry-level position in artificial intelligence might earn between $109,500 to $138,500, and a senior director could make between $178,500 to $310,050. These numbers, while impressive, represent a new plateau rather than the upward trajectory seen in previous years.
Layoffs’ underlying reasons appear to have shifted. In 2023, companies pointed to the need to scale back due to the pandemic’s hiring binge, inflation, and weak consumer demand. This year, with inflation down and many firms profitable and cash-rich, the focus has turned to stock prices. Layoffs are seen as a way to bolster shares, and according to Jeff Shulman, a professor at the University of Washington’s Foster School of Business, this has become the ‘new normal.’
Tech industry’s job market is now characterized by exacting qualification requirements and lower pay. For many, like Allison Croisant, a data scientist laid off by PayPal, the job search has become ‘insane.’ With over 50,000 workers laid off from over 200 tech companies since the year began, the path to reemployment is daunting. The market for tech jobs has tightened considerably, and even those with highly valued skills are considering exiting the industry.
Despite the challenges, there are pockets of growth, particularly in AI, where hiring and expansion are on the rise. Yet, for the many affected by layoffs, the job search has become a grueling process, with some like Krysten Powers, a marketing professional, describing it as ‘humbling’ and ‘a full-time job.’
The tech industry is undergoing a significant transformation. The once-coveted jobs are now fraught with uncertainty, and the once-generous salaries have plateaued. As companies continue to prioritize stock prices over workforce stability, tech workers are left to navigate a new landscape of employment, one that requires resilience, adaptability, and, perhaps most importantly, a reevaluation of what job security means in the digital age.
Related posts:
Tech layoffs are becoming the new normal
Laid-off techies face ‘sense of impending doom’ with job cuts at highest since dot-com crash
Tech layoffs in 2023: Causes, Consequences and Affected Companies
