The number of tech layoffs this year is close to last year’s Great Recession levels, but it’s far from the territory of Internet disruption.
As tech companies battle low stock prices, inflation, high interest rates and the recession, they’ve announced more than 60,000 job cuts this year, according to Amazon.com CEO Andy Jesse. HP Inc. decrease in the next three years; And with a report that Google is considering thousands of layoffs, more will come.
By comparison, about 65,000 tech jobs were lost each year during the 2008 and 2009 recessions, according to Challenger and Gray and Christmas. Job gone in two years.
Some longtime Silicon Valley watchers and analysts say this crash is different from the dot-com busts of 2001 and 2002 because most of the companies that failed then weren’t “real” companies. Although estimates vary on how long the recession will last, they agree that the impact will be significant, affecting workers and other drivers of the industry.
Experts say companies that cut this time will need to grow faster or hire more workers to recover from the pandemic or return to normalcy. But they provide actual goods or services and generate revenue.
MORE: Here are the tech companies that have announced layoffs
Stephen Levy, director and chief economist at the California Center for Economic Sustainability Research, said: “The dot-com crash was largely caused by companies that had no customers or revenue. “Companies that are firing like Amazon or laying off workers like Google and Apple have millions of customers and are profitable,” he added.
This artistic failure was not surprising to others like Levy who had experienced it earlier. Their predictions range from cautiously optimistic to dire.
“There are cycles in Silicon Valley,” says Russell Hancock, CEO of Silicon Valley Joint Ventures. “We’re going to go up. It happens every 10 years,” Hancock said. “It’s too early to say ‘the sky is falling.'” Instead, he said. “The pandemic has proven to be a godsend for technology … but it’s peaked now and we’re not headed for a new plateau. “Now the demand is decreasing.”
But billionaire serial entrepreneur Tom Seibel, CEO of C3.ai, is more pessimistic “It’s just getting started,” he told MarketWatch. “When it’s over, everyone will feel the buzz, businesses big and small. It’s going to be tough, but once we get through it, the industry will recover.”
“All this strange and legalistic behavior is coming to an end. No more people working from home in their pajamas and getting paid in Bitcoin Unfortunately, that era is coming to an end. This failure has been going on for 15 years. Companies print. Billions of dollars per month. It was not sustainable or practical.”
To visualize the numbers:
- Today’s tech job cuts have also brought a number of job losses in the industry as the Covid-19 pandemic turns everything upside down. According to Challenger, Gray and Christmas, 83,000 people will be out of a job in the tech industry by 2020.
- After shedding more than 60,000 jobs this year, the number of U.S. tech jobs created by Silicon Valley’s biggest tech companies was 68,558 between 2020 and 2021, according to an analysis by the Silicon Valley Institute for Regional Studies employment data.
Some of the companies going out of business have their own reasons and circumstances, but most of them have been hit by this year’s share price slump. Twitter’s dramatic numbers come as Elon Musk takes the helm, but its shares are down 73 percent from the $54.20 a share he paid for before buying the company. The slowdown in real estate activity is affecting relatively young related companies. Others, like Giant Elevator, are under pressure to prove they can make a profit.
Watch: Tech hiring is on the decline. These two charts explain how and why
“These are terrible times. Many technology companies haven’t failed,” SAP executive board member Scott Russell told MarketWatch. “In the next few years, almost all the slogans will be risk reduction, cost control and operational efficiency,” he added. Some companies are early in the pandemic. Others, such as Facebook parent Metaplatforms Inc., have doubled down in recent years, and CEO Mark Zuckerberg blamed himself for the layoffs in an email to employees.
As MarketWatch reports, tech workers of all faiths — from diverse backgrounds or H-1B visa holders who need employer sponsorship to stay in the country — are losing their jobs.
Some work better than others. Zip Recruiter data shows there are still healthy jobs for upperclassmen; eg Engineer 2 instead of Engineer 1.
And some areas of the tech industry have been less affected than others, at least so far. A semiconductor company recruiter told MarketWatch that he sees signs of a slowdown. Even Intel Corp., which has announced plans to cut costs, is laying off some positions, he said.
Also, I got fired from a large tech company. What is the next step in my career?
Venture capitalists advise caution. “If you are a growth investor, this may not be the best time to invest at this stage, as the companies are volatile and their valuations are volatile,” said co-founder Parmak Mehta. By Ballistic Ventures in Silicon Valley.
All of this affects not only high-paid tech workers, but also other workers who are part of the larger tech ecosystem.
A shuttered technology services provider for technology companies told MarketWatch that it is disillusioned with the industry. “I’ve seen companies turn over a lot, flip several times,” he said. Regardless of what affects the company and its employees, he said. “Technology seems to have this ritual, viz
A former Twitter employee who was fired after Musk bought the company in early November and cut its workforce in half, told MarketWatch that he was getting calls from recruiters. Because he has extensive technical and management experience.
Do you think the economic downturn will help unions enter the tech space? “I hope so,” he said. “Organizing such workers is more difficult than in other industries and nowhere is it easier.”
But Maria Noel Fernandez, campaign director for Silicon Valley Rising, believes this coalition of labor groups and community leaders “presents an opportunity to build a labor movement in the tech industry and in the Bay Area.”
Also: $3 trillion in losses. Big Tech’s worst year just keeps getting worse.
Low-wage workers are among the first to suffer. The pandemic hit ahead of the largest layoffs of janitors and bus drivers in the San Francisco Bay Area.
Luis Fuentes, president of SEIU-United Service Workers West, said unionized service workers in Silicon Valley have made “tremendous gains,” but most make less than $50,000 a year. He worries that disruptions in the technology sector could dampen growth if they deepen or linger.
“For someone you’ve already missed, it might mean a vacation is postponed, they have more space,” Fuentes said. “It depends on paying the rent to service workers or putting food on the table.”
MarketWatch senior reporter John Schwartz, reporter Joe Hahn and columnist Terese Politi contributed to this article.