Over the last 6 months, we have seen a common denominator among prominent tech companies to lay off a sizeable portion of their staff amidst declines in revenue and an overall slow business environment.
It does look obviously bad, recently Google came out with a report stating that they are on the verge of releasing 12,000 workers. This is quite a significant number and shouldn’t be brushed under the rug.
If you dig into the weeds of these layoffs and look at the statistics for the hiring numbers of these companies, you would see that more than likely they overhired and thought that the engagement that their products got during the pandemic was going to continue.
During the pandemic many tech companies hired in order to meet the demand, it was the logical thing any business would undertake during a period when the market might give the impression that the business is expanding and additional resources might be needed.
As the pandemic tapered off and the economy started to open, CEOs soon realized that the increase in demand was probably just a trend that was trending upwards in congruency with the lockdown. Hence now they have to scale back staff in order to match the level of the market and don’t bleed as much on the balance sheet.
Despite the fact that we are in a downturn in the western economy we are nowhere near panic mode yet, it is very unfortunate for those who are losing their jobs and there will be many more to come as the market is readjusting itself.
If Google for example or Facebook cuts staff by 30-50% then we can say probably something bigger is at play. Until then if such an event ever occurs, we can have confidence in the tech market.
