Mar 14, 2023
What’s Behind the Increasing Numbers of Tech Firm Layoffs?

What’s Behind The Increasing Numbers Of Tech Firm Layoffs?

In recent months, tech companies have laid off thousands of employees. At some of the biggest names in technology, including Meta, Amazon, Netflix, and eventually Google, as well as smaller companies and start-ups, over 120,000 employees are estimated to have lost their jobs in 2022 alone. Announcements about cuts are still being made during early 2023 and are expected to continue according to the New York Times.


So, what is behind the mass exodus of so many tech employees? According to Dr. Mark Robinson, one reason is similar to what happens in the airline industry when one airline lowers its ticket prices followed by similar actions by competing airlines. None of these companies wants to be left out of a potential surge in consumer demand so they will also cut their ticket prices in return. In terms of the recent numbers of layoffs, once a group of well-known companies announces layoffs, it’s often a sure bet that other companies will follow the same strategy to cut their costs.


Another reason we’re seeing more tech layoffs is the fact that many companies simply over-hired during the COVID-19 pandemic, perhaps thinking that customer demand would soon recover. As more companies closed stores and laid off employees, picking up talent on the cheap was the strategy that many companies relied on.


Perhaps the main reason we’ve seen layoffs recently is the belief that the U.S. economy is headed into a recession. Layoffs come as digital advertisers are cutting back on spending and rising inflation curbs consumer spending according to a recent report from CNBC.