During the pandemic, tech companies made massive fortunes. Perhaps, exploiting social and economic conditions in their own favour to gain big profits, global tech conglomerates initiated new trends. But the unsustainability due to the economic slowdown at the global level has led to a massive wave of layoffs in those big companies.
The world’s biggest companies such as Meta, Amazon and Google have been lying off Tech-workers since the start of this year. In just a couple of days, Microsoft has laid off 12,000 tech workers and Google has laid off 10,000 workers and that’s a staggering amount of workers. On the flip side, 70,000 employees have been laid off from tech companies so far this year alone and in 2022 more than 170,000 tech workers have been laid off from big companies. Most people are describing it as the ‘White Collar Layoffs’ but tech companies are describing it the layoff is persistently happening across the board. So, what are the implications and what does it mean for larger economic growth?
Meta initiated layoffs when it announces last year that they are spending too much money on Metaverse, approximately 14 billion dollars on this project, and investors discouraged it due to which meta stocks fell more than 70% of their value before it laid off its tech workers. On the other hand, Amazon has fired 18,000 of its employees since the start of this year.
Over hiring and overspending during the pandemic have been expounded as the reason behind such a big layoff so does the need for cutting costs. There seems to be a slowdown in the advertising business over the last year so certainly, that is the response to cut costs.
Though Tech conglomerates grew extensively during the pandemic and there was a glut of spending during that time on the Tech products such as buying computers, IT services and zoom subscriptions to run businesses online and a humongous amount of money was injected and executives forecasted that this growth would be sustainable in the long run.
For that purpose, these companies hired a lot of people, but the projections failed and now there is an economic slowdown in front of us. Microsoft recently announced its plans for investing 10 billion dollars in AI tool ChatGPT. So, the money is being directed towards this project.
The resizing in the Tech sector happened to take place after the COVID-19 surged demand, and companies hired to accommodate those surges which are now off-trend and companies have to come to its organic growth. With the opening and slowing down of economies, higher inflation, and energy crises, people all across the globe have cut their spending so companies also have to lay off their workers to maintain their growth. This cycle would definitely repeat itself because Artificial intelligence tools are on their way to replacing some of the high-paying jobs in the Tech industry.