Tech Hiring Slowdown in 2023, Find Out Why ?
In recent years, the technology industry has been one of the fastest-growing sectors in the global economy, attracting top talent from around the world. However, in the wake of the COVID-19 pandemic and the resulting economic downturn, the tech industry has experienced a significant hiring slowdown.
Many of the largest tech companies, such as Google, Amazon, and Facebook, have announced hiring freezes or significant reductions in their hiring plans. In this blog, we will explore the reasons behind the tech hiring slowdown and its potential impact on the industry and the wider economy.
One of the main reasons behind the tech hiring slowdown is the economic uncertainty caused by the COVID-19 pandemic. The pandemic has disrupted global supply chains, slowed down economic growth, and resulted in widespread job losses. As a result, many tech companies are hesitant to commit to large-scale hiring plans in such an uncertain environment. They are also looking to cut costs and preserve cash, which often means reducing their workforce or at least slowing down hiring.
Another factor contributing to the tech hiring slowdown is the increasing scrutiny and regulation of the tech industry by governments around the world. In recent years, tech companies have faced increasing criticism and pressure from regulators over issues such as data privacy, antitrust concerns, and the spread of misinformation.
This has led to a growing number of lawsuits and regulatory actions against tech companies, which can be costly and time-consuming to defend against. As a result, many tech companies are now taking a more cautious approach to hiring in order to mitigate the risks associated with these regulatory challenges.
A third factor contributing to the tech hiring slowdown is the changing nature of work itself. The pandemic has forced many companies to adopt remote work policies, which have in turn changed the way that they approach hiring. In some cases, companies have found that they can operate effectively with a smaller workforce, thanks to the increased productivity and flexibility offered by remote work. This has led some companies to rethink their hiring strategies and focus on retaining their existing workforce rather than hiring new employees. Startup tech companies hiring is also expected to be slow in the current climate.
Below you’ll find a comprehensive list of top 10 organization known for layoffs in tech that have occurred in 2023:
- National Public Radio
As per a memo obtained by ABC News, National Public Radio (NPR), a national network of public radio stations, has declared that it will be terminating 10% of its staff, which amounts to a minimum of 100 employees.
The CEO of NPR, John Lansing, has stated in the memo that the organization is facing a $30 million deficit on its annual budget of $300 million.
Lansing also mentioned that the global economy remains uncertain, and NPR is currently undertaking critical and ambitious projects. Due to this, the advertising industry has suffered, and corporate sponsorship revenue has declined significantly.
On Monday, Twilio, a startup in the cloud computing industry, announced its plans to terminate approximately 1,500 workers, which is equivalent to 17% of its workforce.
In a message addressed to the staff, CEO and co-founder Jeff Lawson explained that the business landscape has become increasingly challenging. Lawson stated that “environments change, and that means we must” and that profit must now be given a much higher priority than before.
Despite leaving the previous phase in a strong market position and with significant cash reserves, these will not be enough to weather the following phase. As many of the company’s employees work remotely, Lawson also revealed that the San Francisco-based company plans to shut down some of its offices in the coming months.
On February 9, Yahoo announced that it plans to lay off 20% of its workforce by the end of the year, with 1,000 employees being let go this week.
The layoffs will primarily affect Yahoo’s ad tech division, Yahoo for Business, and will result in a more than 50% reduction in its workforce by the end of 2023 as part of the company’s efforts to restructure its ads business, according to a representative from Yahoo.
On February 7, in a memo to employees, Eric Yuan, the CEO of Zoom, revealed that the company had laid off approximately 1,300 workers, which equates to 15% of its workforce.
Despite experiencing a surge in demand during the pandemic, resulting in a tripling of its size over two years, Yuan acknowledged that the company must take a hard look at itself and reset its priorities to endure the current economic climate.
Yuan noted that while people and businesses continue to depend on Zoom, the unstable global economy and its impact on clients necessitated the difficult decision to downsize.
On February 7, eBay, a major e-commerce company, revealed in a filing with the SEC that it will lay off 500 employees, representing 4% of its workforce, in the next 24 hours.
In a letter to the company’s staff, CEO Jamie Iannone explained that the layoffs are necessary to invest in new technologies, focus on growth, and improve customer experiences, as well as to support innovation and expansion across the platform.
On January 31, PayPal’s President and CEO, Dan Schulman, announced in a statement that the payments company will be letting go of approximately 2,000 employees, which represents 7% of its workforce.
Schulman noted that the layoffs are a result of the company’s efforts to adjust to the challenging macroeconomic climate. He acknowledged that these difficult decisions would impact some of his colleagues and that change can be challenging, particularly when it means bidding farewell to beloved coworkers and friends.
On January 26, SAP, the largest software company in Europe, announced in its earnings release that it will lay off over 2,800 employees, or 2.5% of its global workforce.
The company referred to this as a “targeted restructuring” which will cost between 250 million and 300 million euros. SAP expects this move to result in annual cost reductions by 2024.
IBM disclosed on January 25 that it would lay off 3,900 employees, which is 1.5% of its total workforce. The decision is related to the sale of two business divisions and the previously announced spinoff of IT management company Kyndryl, according to a spokesperson who spoke with ABC News.
The spokesperson from IBM added that the layoffs will cost the company $300 million in the first quarter of 2023.
On January 23, Spotify, a music streaming service based in Sweden, announced its plan to lay off 600 employees, which accounts for 6% of its workforce.
In a memo to staff, CEO Daniel Ek stated that despite the company’s great success during the pandemic, it faced a challenging business environment.
Alphabet Inc., the parent company of Google, announced on January 20th that it plans to cut approximately 12,000 positions globally, affecting about 6% of its workforce.
In an email sent to Google staff on Friday morning, CEO Sundar Pichai expressed regret over the decision, stating that the layoffs would impact talented employees whom they had worked hard to recruit and loved working with.
How Layoff is Affecting The Other Industries
On February 1 2023, FedEx disclosed in a memo from its President and CEO Raj Subramaniam that it will be laying off 10% of its officer and director team. Subramaniam stated that the company needs to become a more efficient and agile organization to better align with customer demand.
He added that saying goodbye to longtime colleagues and friends whom they value and respect is extraordinarily difficult but examining the business critically is his responsibility.
Similarly, Newell Brands, the parent company of various consumer brands like Coleman and Crockpot, has announced on January 23 that it intends to lay off 13% of its office staff due to the economic climate realities.
The tech hiring slowdown is not without consequences, both for the tech industry and the wider economy. For the tech industry, the slowdown may mean a reduction in innovation and development, as companies are forced to scale back their research and development efforts. This could also lead to a decline in investment in new technologies, as investors become more cautious about committing capital to the industry. The slowdown could also have a negative impact on the wider economy, as the tech industry has been a major driver of job creation and economic growth in recent years.
However, there are also some potential benefits to the tech hiring slowdown. For one, it could lead to a more balanced job market, as job seekers are forced to consider a wider range of industries and job roles. This could lead to a more diverse and inclusive workforce, as companies compete for talent from a broader pool of candidates. Additionally, the slowdown could lead to a more sustainable and stable tech industry in the long term, as companies are forced to focus on building strong, resilient business models rather than relying on rapid growth and expansion. Lastly, it would compel companies to include modern recruitment technologies like Video Interviewing software into their tech recruitment stack. Video interview software is exceptionally good at helping fill positions faster.
In conclusion, the tech hiring slowdown is a complex issue that is being driven by a range of factors, including economic uncertainty, regulatory pressures, and changing work patterns. While there are certainly risks associated with the slowdown, there are also potential benefits, such as a more diverse and inclusive workforce and a more sustainable tech industry. Ultimately, it will be up to tech companies and their leaders to navigate these challenges and find a path forward that balances short-term cost-cutting with long-term growth and stability.
Frequently Asked Questions (FAQ)
- Are there fewer tech jobs available now?
Answer: Yes, the tech industry is facing a tough time, with 150,000+ tech workers losing their jobs in 2023, and more than half of them losing jobs in November and December.
- Is the situation getting worse?
Answer: Yes, hiring sentiment has fallen by 17% points compared to the same time last year (January-March 2022), and by 22% points compared to the preceding quarter.
- Why is the tech industry slowing down?
Answer: Many experts believe that rising interest rates are the main reason for the current tech slowdown. The value of tech firms and products did not decrease overnight.
- Will there be more tech layoffs in 2023?
Answer: Yes, tens of thousands of tech workers lost their jobs in 2023 due to layoffs by major brands like Google, Amazon, Microsoft, Yahoo, and Zoom. Startups from various industries, including cryptocurrency and enterprise SaaS, have also confirmed layoffs.
- Why are there tech layoffs in 2023?
Answer: The pandemic caused a surge in tech buying to support remote work and e-commerce, but now companies face revenue declines, which is why they are laying off workers. It’s not just tech giants that are affected.