Post-pandemic the world looks much different than what we anticipated. With climate change, changes in consumer behaviours and attitudes, and the most recent impacts of layoffs across the globe, companies have been letting go of their employees to great lengths. The tech sector in particular has been an active participant. According to layoff.fyi, a “job-cuts” site, about 101 companies had laid off 25,436 employees in the first few weeks of January 2023, globally. The data averages about 1,600 tech employees being let go per day across the world. In 2022, around 1,024 tech companies, including large corporations and startups, laid off 154,336 employees, making it the worst year in a decade.
Indian startups like Sharchat, Rebel Foods, Captain Fresh, Dunzo, BharatAgri, Ola, DeHaat, Coin DCX, LEAD School and Bounce among others have laid off several hundred employees. As part of its global retrenchment drive, Amazon has laid off around 1,000 Indian workers. As a result of uncertain economic conditions, the company announced that it will cut around 18,000 jobs worldwide in January this year along with the recent round of 9,000 layoffs.
Tech giants and startups have together laid off over 17,000 employees in 2022 in India alone. On a global scale too, organizations like Twitter for instance, in a frenzy decided to lay off 50% of their workforce. A majority of these companies are unicorns, late-stage firms or early-stage startups. The worst affected industries are edtech, fintech, hyperlocal delivery, insure tech, logistics, gaming and e-commerce.
What caused these layoffs?
While the effects of such layoffs are massive, companies are forced to give a rationale behind this huge wave of “letting go.” To understand this, let’s step back and look at what happened at the start of 2020; from then on, it’s really a domino effect.
When the pandemic hit, tech companies were working at full capacity, which meant job security, higher pay, scheduled promotions, internal hiring, WFH options, and much more. Covid-19 changed the way we perceived things and altered our priorities and patterns. By staying indoors, our interactions with the world were limited, which further led to lower spending and high savings.
The economy began to function the same way; everything shifted online, from meetings to studies, festivities to weddings. Post the lockdown, however, the primal urge to socialize kicked in, which further led to those novel concepts of Covid (such as online classes, zoom calls, virtual concerts, etc) taking a backseat. These unavoidable changes slowly and eventually made their way to the corporate world.
Probably the most important part of the layoff scenario is that organizations, big or small, did not shy away from accepting that they may have jumped the hiring wagon. Hurrying hiring decisions and being bullish about the market and business following Covid19 contributed to the excess hiring that has resulted in layoffs.
Most of the CEOs, while acknowledging the mass layoffs, have made a uniform acknowledgement; that they may have been a little too buoyant on the post-pandemic digitisation tide. Now, these layoffs have left a bitter taste, and the base of these companies has quavered. Organizations will have to do the right thing to regain the confidence of potential future employees. With the layoffs’ effect, companies have tried to go for a lean organisational structure by cutting off excess costs.
Is the layoff in reality a trade-off?
Looking at the scenario through a slightly tweaked lens, it isn’t that these companies do not have the monetary resources, especially organizations such as Microsoft and Google. It is fascinating that while Microsoft has reported laying off around 10,000 employees, it has simultaneously announced an investment of $10 billion in Open.ai. Similarly, Alphabet, Google’s parent company, laid off 12,000 employees globally. At the same time, Google is investing huge amounts of money into its operations and R&D for Bard AI.
In recent news, Google did not restrict itself to humans; its subsidiary, “Everyday Robots” fired the robots that on the sidelines cleaned and maintained the Google offices. Another giant, Meta removed 11,000 employees in late 2022 with an additional 10,000 job cuts in March. Humans and robots are now working together in a way that we could never have imagined, and thus companies are making conscious decisions based on that fact. Understanding that layoffs not only impact the employee but also have a ripple effect on the family, society, nation, and world at large is crucial.
2008 financial history repeats itself
In merely 11 days, the financial stability of the world’s strongest economy was shaken to its roots, fearing a repeat of the 2008 financial crisis. Silvergate, Silicon Valley Bank, Signature Bank & Credit Suisse have witnessed a financial downfall, with hundreds of thousands of customers left helpless amidst a falling financial ecosystem.
This series of events has led individuals and companies worldwide to be cautious in their decisions and overall strategies. Not only has it affected corporates, their finances, and business decisions, but also individuals with personal finances are considering parking their money away from financial institutions.
Money is being withdrawn from the markets, which has led to the markets crashing and observers being bearish about it. Experts believe that this downfall will have a ripple effect on economies worldwide due to their direct/ indirect dependence on the US.
In the face of current headwinds, the great resignation seems a thing of the distant past now, but the future may be another Pandora’s box. Going forward, we will see companies being extremely cautious with their hiring decisions. They will, of course, seek to be profitable, but mostly without compromising on humane ethics. Irrespective of the reasons, the demand for necessary talent is ceaseless, if not increasing.
Although organizations have gone through multiple obstacles like the pandemic, silent quitting, and great resignation, the hiring space is not shrinking. As new technologies take precedence, the demand for the necessary talent pool will only bolster.
Authored by Richa
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