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What The Mass Tech Layoffs And Job Cuts This Year Mean For 2023

‘This is a reflection moment for tech.’

In August, about nine months after joining Google as a software engineer in its Cloud division, Tianyi Gao began to worry about his job. The Austin-based Google employee, an H1B visa holder originally from China, received a “support check in” as part of the company’s newly revamped performance review process, a sign that his job could be in jeopardy.

“When I got it, I was a little scared,” he told Forbes. “I wanted a backup plan.”

The plan: A new software engineering job at Amazon, working for the company’s Whole Foods division. He applied after a recruiter reached out, got the offer and signed. But three days before he was set to start — and after he’d already resigned from Google — Amazon rescinded the offer.

He tried to revoke his resignation, but Google wouldn’t allow it. Because of his visa, he has 60 days to find a new job or face deportation.

“I worry about my future, if I can stay here,” he said.

Amazon spokesperson Brad Glasser confirmed the company has rescinded job offers, but said it affected only a “small number of roles.” “As we continue with our annual operating plan review, and in light of the challenging economic conditions, we’ve made the difficult decision to eliminate some roles in particular businesses for which we’ve extended offers but the candidates have not yet joined the company,” he said in a statement. Google declined to comment.

Gao is one of thousands of tech employees affected by massive job cuts, layoffs and growth slowdowns in Silicon Valley. 2022 was a year of retrenchment for much of the tech industry, a major outlier from the past several years when the perpetually booming sector saw big tech valuations top a trillion dollars and companies ferociously staffed up their empires. Even as big companies like Google and Amazon faced regulatory scrutiny, they touted themselves as job creators and stimuli for their local economies. But in the past year, macroeconomic trends like high interest rates and lower ad spending have stymied what has recently been a stunning period of growth.

Some 152,000 employees were laid off in 2022 from more than 1,000 companies, according to the website Layoffs.fyi, which records job cuts across the industry. Another report, from the firm Challenger, Gray, and Christmas, which has tracked the job market for almost 30 years, said the biggest spike in tech layoffs was in November with almost 53,000 cuts. The figure is the highest monthly total for the sector since 2000, when the firm started keeping detailed track of the tech industry. It’s also the highest year to date job cut tally for the sector since 2002, after the collapse of the dotcom bubble.

Analysts told Forbes they think layoffs will continue until at least the first half of 2023. The economic conditions have also prompted the industry to take an existential look at itself and focus more on core strengths, after years of trying to diversify revenue. For years, Google parent Alphabet tried to build a reputation as the moonshot company, investing in audacious projects like high-flying Wi-Fi balloons, smart contact lenses and delivery drones. Facebook’s Mark Zuckerberg bet his entire company on the metaverse, a fledgling digital realm he sees as the next big computing platform.

But so far none of those bets have paid off, and coupled with dire economic straits, companies may try to reset and invest more in the core products that made them juggernauts to begin with, said Bledi Taska, chief economist at Lightcast, a labor market analytics company. That could mean Google focusing more on search and productivity apps, and Facebook homing in on its social networks.

“This is a reflection moment for tech,” said Taska. “That’s not necessarily a bad thing. You need that for a healthy industry.”

‘A waste of time’
The downsizing has affected tech juggernauts and startups alike. At Facebook parent Meta, Zuckerberg in November slashed 13 percent of the company’s workforce, laying off 11,000 people. Amazon’s retrenchment could be almost as severe as Meta’s, with 10,000 workers expected to be cut from its corporate workforce. After Elon Musk took over Twitter in October, he lopped roughly half its workforce, nixing 3,700 employees (many more have left voluntarily since then).

Smaller companies suffered similar fates: Payments company Stripe laid off 1,050 people. Noom, the health and fitness app, got rid of 1,095 people. And Kraken, the cryptocurrency exchange, laid off 1,100 employees.

Part of the pullback is due to the pandemic, analysts said. As people quarantined in 2020 and life suddenly moved online in a way it never had before, companies hired in droves. Now as life returns to a pre-pandemic rhythm, those companies are correcting that overzealousness in staffing.

But there are other pandemic-related issues at play too, said Daniel Keum, an assistant professor of management at the Columbia Business School. In the last few years, companies may have resisted laying people off because of the negative attention or cruelness of doing so in the depths of a pandemic, Keum said. Companies have also found it difficult to judge worker performance in an all-remote environment, so they may have held off on reducing headcount. Now, as more companies head back to the office, at least on a part-time basis, leadership is considering the cuts it might previously have resisted.

“The natural rate of evaluation and turnover was really artificially low,” Keum said. “So there’s a little bit of catching up on that as well.”

Meanwhile, LinkedIn is littered with posts from devastated workers across the industry who have been laid off, had job offers rescinded or dealt with other woes of an industry in belt-tightening mode.

Some tech company recruits feel strung along. One international master’s student at Georgia State University, part of Amazon’s New Grad program for recruiting young talent, received an offer to work at the e-commerce giant’s retail division earlier this year. He had asked for a deferral until 2023 so he could finish an internship. After months of uncertainty, he finally got an email out of the blue in December, rejecting his deferral request. The company had “recently paused new incremental hires in our corporate workforce,” according to the email, which was viewed by Forbes.

Asked if he would work at Amazon in the future if a spot opened up, he said no. “That was my dream company, actually,” he said. “But this was a waste of time.”

Source: forbes.com

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