The global tech industry was hit hard by layoffs in 2022, which have continued strongly in 2023, with the likes of Google, Amazon, Microsoft, Yahoo, Zoom, Twitter, Spotify, Pinterest, and a dozen other giants driving the downsizing. Joining them have been the startups across all sectors, including tech startups. Those that are avoiding the layoff have put in place a hiring freeze. From major firms to small fintech startups, the US tech market accounts for over 35 percent of the world market, marking the worst start to a year in layoffs with over 180,000 jobs in Jan-Feb 2023.
How did the industry, with a great decade and one of the best pay scales, get all nervous and jittery? Many reasons could explain the downsizing wave going on in tech companies.
First, the global economy is slipping into recession with rising inflation and interest rates after the COVID pandemic, affecting overall jobs in various labor markets. Put another way, the mass tech layoffs are spooking the labor market and signaling a global recession.
Second, the tech industry was riding on high expectations with the growth it came across during the COVID pandemic. High expectations translated into over-hiring, overpaying, over-valuations, and overzealous business growth forecasts. But as some of these expectations came tumbling down, the domino effect of deep headcounts across tech companies was not out of the blue.
Linked to unrealistic growth expectations is also another factor; the tech companies have been seen to let go of two key categories of workers: those not necessarily part of the key operations but the lavish perks at company offices like famous chefs, masseuses, etc., and then those who could be replaced with cheaper, remote counterparts in developing countries with same skill set. The importance and cost-effectiveness of remote workers from around the world came to the fore much more strongly during the pandemic, and tech companies, especially in US and Europe, have been seen hiring freelancers and remote employees on short-term contracts that might not require equal or similar pay scale as a full-time permanent employee at the facility.
What happens next depends on where the global economy is headed and the tech companies' readjustment and pivoting of growth projections. Is this (or will this) affect tech jobs in countries like Pakistan? While the global economic repercussions have a ripple effect, and the ongoing economic slowdown is affecting all sectors, a significant layoff spree in the tech space is less likely as per industry insiders, as most of the companies, as well as freelance/ remote workers, have the potential to take advantage of the increase in the business process outsourcing (BPO services) and other ICT product and service needs of the western tech giants.
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