The tech industry is a topic frequently mentioned in modern-day journalism since there are so many things happening in it constantly. The ever-evolving world of technology is an entity that has taken a storm across the globe and is set to keep going…Or is it?
The tech giants of Silicon Valley claim rebellion against the conventional methods for running companies and managing employees, from home-office being popular to various innovative methods of making IT and tech work easier. The truth is, these companies are closer to conventional than they claim.
According to Lensa, the labor market has become strained and uneasy thanks to the thousands of layoffs happening globally, with tech companies running the headlines for these job erasures. Over 300,000 workers have been let go in the span of a little over a year and due to this, their stocks have been increasing in percentages.
Before we look into how these layoffs impact job prospects, let’s first discover the cause behind this strenuous phenomenon.
The cause of the layoffs
The main cause of these layoffs could be blamed on inflation. In June of 2022, we saw the highest inflation we’ve seen globally for the past 40 years. With prices sky high, consumers started buying less, somewhat blunting the strain inflation took on the economy. Due to the earlier-mentioned prices, households and firms had to make some cutbacks in different areas. For tech companies, the prices of services increased, which meant various changes were made in that sector.
Most, if not all tech companies rely on ads as revenue for commercializing their company thus increasing consumers buying from them. With advertising being a large expense, they had to decrease their spending during this time as well.
Heightened interest rates were another factor in this decision on behalf of tech companies. Venture capitalists were directly impacted by governments raising interest rates to slow down the rise of inflation, thus decreasing investments on behalf of companies and further slowing growth.
These interest rates also increased investor pressure for companies whose revenues took a hit since this meant investor profits weren’t prioritized or heightened. The extreme economic uncertainty was already a deciding factor for this decision since all companies want to soften the blow they’d receive from a potential recession.
The biggest reason companies can even allow themselves to let this massive number of employees go is due to over-hiring during the pandemic to ease the influx of online activity from everyone being stuck at home. Tech companies saw record profits during the pandemic, giving them the impression this amount of activity will almost certainly maintain itself later on.
The rapid growth and now its decrease has led companies into considering sustainability more seriously.
Another reason for the layoffs in the tech industry is the increasing adoption of automation and artificial intelligence (AI). As technology continues to advance, companies are finding more efficient ways to perform tasks, which often results in a reduction of human labor. While AI and automation can improve productivity and lower costs for companies, they also eliminate the need for certain roles and skill sets. As a result, some tech workers are being displaced by machines, which is contributing to the overall number of layoffs in the industry.
How the layoffs affect job prospects
Individuals who have been laid off during this phase from tech companies face difficulties in finding new workplaces thanks to the highly competitive nature the industry has taken on, leading these professionals to other work sectors they can somehow assimilate into. Statistics show that many of the employees laid off haven’t been from IT departments.
As for those who remain working for these companies, they’ve been dealt a difficult card. Fewer people may be working for these companies but that doesn’t mean there is less work to do. Current working employees face heightened workloads since no one else is there to do them, thus increasing pressure to perform on the same level as before.
The confidence and trust employees previously had for the companies they worked for has now been obliterated, putting remaining employees at ease as well. Stresses over payroll and work stability are nearly non-existent.
Now everyone is facing both sides of the same coin. Companies are laying off their workforce and in turn tech workers are becoming increasingly selective with where they apply and what compensation they get.
The amount of jobs hasn’t technically decreased. Technology companies still need skilled workers who can withstand the workloads everyone is experiencing and provide quality output. Online work has provided us with new job platforms skilled labor can join.
What this boils down to is if you aren’t an engineer or have skills in a sought-after task, you will find it difficult to join a tech company’s workforce in the current climate. On the bright side, the situation allows workers to make higher demands due to companies needing labor nonetheless.
You are now capable of doing the same background check on a company as they would for you, meaning though your job security will sadly never be the same as it was before the pandemic, you can at least get a clear idea of what company you are joining and bring the call yourself.
In conclusion, the recent wave of layoffs in the tech industry has created a competitive job market for tech workers, and those who have been laid off may face difficulties finding new opportunities. However, the industry is still in need of skilled workers, and there are new job platforms available. Although job security may never be the same as it was before the pandemic, workers can now do their own background checks on companies and make higher demands. Despite the challenges, there is room for optimism as companies are investing in new development and projects that will create new jobs in the future.