The Unsettling Start of 2024: Over 7,500 Layoffs in Tech
In the first 17 days of 2024, the tech industry has witnessed a staggering wave of layoffs, dashing hopes for a swift recovery from the challenges of the previous year. The landscape that once thrived in the wake of 2021’s boom now grappling with an unexpected downturn.
The Fallout from 2021’s Tech Boom
The aftermath of the 2021 tech boom is still palpable, as companies that once eagerly hired are now facing the harsh reality of downsizing. Giants like Meta, Microsoft, and Google, once revered as top-tier employers, find themselves navigating through a sea of layoffs, significantly impacting the morale of their workforce.
Google’s Dilemma: Advertising Sales Team Takes a Hit
This week, Google made headlines by announcing the elimination of several hundred positions from its advertising sales team. Simultaneously, Apple delivered a blow by shutting down a 121-person team in San Diego, focused on AI features. Employees faced a daunting choice: relocate or face the imminent threat of layoffs.
Unraveling the Mystery: Why the Surge in Tech Layoffs?
The recent surge in tech layoffs mirrors the trends observed in late 2022 and 2023, albeit on a smaller scale. One prominent factor contributing to these job cuts is the shifting priorities of tech companies, many of whom are now fully invested in generative AI.
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The Shakeout Effect
Erica Groshen, a senior economics advisor at the Cornell University School of Industrial and Labor Relations, sheds light on the situation. “With any rapid technological change, there’s always a shakeout,” she explains. Determining the required workforce for new initiatives is challenging. While a significant effort may be needed to launch a project, maintaining it often requires fewer resources. Tech companies strive to avoid “zombie operations” that barely sustain themselves, aiming for nimbleness in adapting to change.
