Why have big tech companies started mass layoffs??

Several tech companies across the world had made huge profits during the pandemic, have led the way for the global economy over the past two years, lifting the market during the worst days of the Covid-19 pandemic and now the layoffs is essentially for the cost-cutting measures to reduce excessive workforce or redundancies due to job eliminations.

During and post Covid, several companies doubled their sizes — including some small tech firms that hired crazily because the world was going towards digitization. “Now, when it starts becoming more ‘unit economics–driven,’ it will become an opportunity for some companies to cut their unnecessary load, and demand may also slow down, given the overall global macroeconomic scenario. Hence, employers are forced to re-adjust their cost structures to the available demand.”

Tech layoffs are skyrocketing and several enterprises are opting for mass layoffs and freezing hirings to maintain the profit ratio by tightening their belts and they are in a good faith that everything will go on-line, digital is going to drive the market on their own terms but creating a global scenario as the uncertainties in the market and challenging global macroeconomic conditions. Thousands of employees have lost their jobs in the country and are sharing their bitter layoff experience.

Job cuts are hitting the tech sector hard after years of unbridled growth. Facebook parent Meta, Twitter, Shopify, Salesforce, Stripe and CISCO have laid off thousands of employees to weather the rough macroeconomic conditions. The past few months have been difficult for people working in the private sector in India, particularly for employees of tech companies.

It’s not just the startups that are laying off people, but also storied IT services organizations. Amazon will continue to lay off employees in the coming year. Thankfully, there is no such prospect of recession in India.

Experts believe this might be just the beginning of job cuts in India. Startups with unicorn status including Byju’s Unacademy, Meesho, Ola, Blinkit, Cars24 and others, have laid off thousands of people in their workforce.

Secondly, organizations have been bullish and anticipating a higher valuation and a lot of inflow of funds from venture capitalists. Probably the organizations could not anticipate that the boom of the pandemic would go down so fast.

Economic experts warn that such high volumes of layoffs could be bad news for other industries, as it signals the extent to which the current bout of inflation and high interest rates are squeezing companies out of cash, even though the current employment picture for other industries is relatively strong.

Dr. Deepak Kumar Sahu, President & CEO, VARINDIA