More than 150,000 workers have been removed by a number of the largest tech corporations in the world recently. The corporations involved have offered several justifications for why this was essential, but the main one is a need to cut expenses as global economic development slows down. It’s unlikely to be because the related businesses require funding.
Microsoft +2.1%, said to have let go of 10,000 staff, announced nearly simultaneously that it would be investing $10 billion in OpenAI, the company behind the popular software ChatGPT. The plan to spend $1 million for each laid-off employee in an AI startup appears to have an economic motivation at its core. Similar plans were made by Alphabet+2%, the parent firm of Google+2%, to slash its global headcount by 12,000, or around 6%.
Sundar Pichai, CEO of Google, previously referred to artificial intelligence as the most transformative technology of all time. He claimed that the company’s plan in making the layoffs will be to “focus our talent and capital to our highest priorities.” It’s widely believed that Google is developing a ChatGPT rival powered by AI that will be unveiled soon.
The amount of tech layoffs announced in January suggests that the issue will only worsen in 2023, even though in 2022, tech layoffs reached levels not seen in years, even though many tech companies were scrambling to hire workers. Thousands of employees at dozens of computer enterprises started getting laid off in 2022, a year in which many businesses struggled to find qualified IT staff. And it appears that 2023 will follow the same path, with several tech firms reducing their workforces.
According to the layoffs tracking website Layoffs. Two hundred tech companies have fired 59,448 employees so far in 2023. As of December 2022, the official unemployment rate in the United States was 3.5 per cent, matching the 10-year low attained in February 2020, right before the COVID-19 pandemic started.
What’s more telling is that, as of December, CompTIA reported that the unemployment rate for the tech sector was just under 2%. While receiving a pink slip can be difficult, things are not always hopeless.
Companies in the tech sector, at least the bigger ones, frequently offer severance packages that include several weeks to months of money, several months of paid insurance, and assistance in finding new jobs.
Additionally, those people might not remain unemployed for very long because many businesses that aren’t traditionally thought of as “tech companies” rely on expanding their IT capabilities to satisfy the demands of their clients.
The Los Angeles Times reported that the early 2000s dot-com bubble implosion caused a rush of experienced IT workers to enter the labour market, notably software engineers, which helped stimulate a fresh wave of IT spending. With newly liberated IT workers now able to go to smaller tech organisations with greater flexibility and other companies eager to grow their IT capabilities, that might happen again.
CRN has put up a list of tech organisations that have fired employees since the start of this year. It should be noted that this list of tech layoffs focuses primarily on businesses with a strong emphasis on the B2B IT sector and excludes layoffs at companies with a consumer focus, such as Spotify. Additionally, it excludes tech layoffs by businesses that aren’t typically regarded as tech companies but may have let go of some of their IT staff.