During last year’s labor market was remarkably strongthe tech industry was an exception.
After a massive hiring frenzy in the first two years of the pandemic, industry giants like Amazon and Goal Course reversed in 2022. According to this, there were at least 154,000 layoffs from more than 1,000 technology companies last year Layoffs.fyia website that has tracked tech layoffs since March 2020.
The website’s figures – which are likely underestimated – have continued at a rapid pace in 2023, with more than 26,000 layoffs recorded so far this year.
“The number of actual layoffs will be much higher than what the site says simply because most layoffs go unreported,” Roger Lee, the creator of Layoffs.fyi, told USA TODAY. “Unfortunately, I don’t see the layoffs going away any time soon.”
Which tech companies are making layoffs?
Layoffs.fyi data shows that US tech companies shed the most jobs over the past year:
- Goal: 11,000.
- Amazon: 10,000.
- Cisco: 4,100.
- Caravan: 4,000.
- Twitter: 3,700.
Are tech companies freezing hiring?
Tech job vacancies dropped by almost 30% from January to December last year, while industry hiring fell 23%, according to December data from talent acquisition firm iCIMS.
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Why are there so many layoffs right now?
Lockdowns have had a major impact on consumer spending. Experiences like travel or dining were largely off the table, so people started shifting their discretionary spending to products from tech companies like Amazon and Peloton.
However, it didn’t take long for consumers to revert to their pre-pandemic spending patterns, according to Rucha Vankudre, senior economist at jobs analysis firm Lightcast.
“What we’re seeing is really just some kind of renormalization,” Vankudre said. “And that means in many cases these companies have hired too much.”
Higher interest rates also play a role in layoffs, according to Daniel Keum, associate professor of business at Columbia Business School.
“It’s not that big techs are running out of money, but they’re making huge investments in risky new businesses. And these things have gotten a lot more expensive to fund. So they withdraw,” said Keum.
Will tech layoffs continue in 2023?
Lee launched Layoffs.fyi in March 2020 to help laid-off tech workers gain visibility and find new jobs.
“Honestly, in 2021, I thought about shutting down the site because I thought it served its purpose,” Lee said. “I didn’t expect that fast-forward from 2022 to 2023 we would see another wave of layoffs.”
As of Wednesday, Layoffs.fyi has already tracked more than 100 companies that completed more than 26,000 layoffs in 2023.
Key layoffs announced this year include:
- Amazon: 8,000.
- Sales staff: 8,000.
- Coin base: 950.
Microsoft also confirmed on Wednesday that this would be the case reduction of its workforce around 10,000 people this year.
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Lee hopes job cuts in the industry will start subsidizing by the end of the year when rate hikes slow.
According to Keum, tech layoffs are likely to spread to small and medium-sized tech companies this year as venture capitalists rein in spending.
“You’re going to see kind of a gradual shift from the big tech industry to the broader tech industry. The layoffs will be a bit more widespread,” he said.
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Will layoffs spread to other industries in 2023?
While certain industries such as technology and media saw an influx of layoffs, the broader job market remained resilient.
The US economy added 4.5 million jobs last year, and the unemployment rate in December fell from 3.7% to 3.5%, hitting a 50-year low.
“Across the economy, this is not a problem that we see,” Vankudre said. “It seems like a really nice niche[for the tech industry]right now.”
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