While last year’s labor market was remarkably strong, the tech industry was an exception.
Industry giants like Amazon and Meta reversed course in 2022, after massive hiring in the first two years of the pandemic. There were at least 154,000 layoffs from more than 1,000 tech companies last year, according to Layoffs.fyi, a website tracking tech layoffs since March 2020.
Website layoffs — which are likely an undercount — have continued at a rapid clip in 2023, recording more than 26,000 layoffs so far this year.
Roger Lee, creator of Layoffs.fyi, told USA Today, “The actual number of layoffs is going to be much higher than what’s on the site, because most layoffs are not reported.” “Unfortunately, I don’t see layoffs going away anytime soon.”
Which tech companies are laying off?
Layoffs.fyi data shows the US tech companies that laid off the most jobs last year:
- Meta: 11,000.
- Amazon: 10,000.
- Cisco: 4,100.
- Caravana: 4,000.
- Twitter: 3,700.
Are tech companies holding back on hiring?
According to December data from talent acquisition company iCIMS, job openings for tech jobs declined by nearly 30% from January to December of last year, while hiring in the industry declined by 23%.
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Why are there so many layoffs now?
The lockdown had a major impact on consumer spending. Experiences like travel or restaurants were largely off the table, so people began shifting their discretionary spending to products from tech companies like Amazon and Peloton.
It didn’t take long for consumers to revert to their pre-pandemic spending patterns, according to Rucha Vankudre, a senior economist at labor market analytics firm Lightcast.
“What we’re seeing is really a renewal of sorts,” Vancoudre said. “And that means that in many cases, these firms are over-hired.”
High interest rates also play a role in layoffs, according to Daniel Cayum, an associate professor of business at Columbia Business School.
“It’s not that the big techs are running low on cash, but they’re investing heavily in risky new business areas. And these things have become too expensive to fund. So they’re pulling back,” Keum he said.
Will the Tech Layoffs Continue in 2023?
Lee initiated the layoffs in March of 2020 to help laid-off tech workers gain visibility and find new jobs.
“Honestly, in 2021, I thought about taking the site down because I felt it had served its purpose,” Lee said. “I didn’t expect that, fast forward to 2022 to 2023, we would see another wave of layoffs.”
As of Wednesday, Layoffs.fyi has already tracked 100 companies planning more than 26,000 layoffs in 2023.
Major layoff announcements so far this year include:
- Amazon: 8,000.
- Salesforce: 8,000.
- Coinbase: 950.
Microsoft also confirmed on Wednesday that it will cut 10,000 people in its workforce this year.
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Lee expects job cuts in the industry to start slowing down by the end of the year if interest rate hikes slow.
Kayum said tech layoffs this year will likely spread to small and medium-sized tech companies as venture capitalists reduce their spending.
“You’ll see a gradual ripple from big tech to the broader tech industry. The layoffs will be a little more widespread,” he said.
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Will layoffs spread to other industries in 2023?
While some industries like tech and media have seen an influx of layoffs, the broader labor market remains strong.
The US economy added 4.5 million jobs last year, and the unemployment rate fell from 3.7% to 3.5% in December, matching a 50-year low.
“In the economy, it’s not a problem that we’re seeing,” Vancoudre said. “It feels really great at the moment (for the tech industry).”
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