Once upon a time, the tech sector was a beacon of career stability. With the increasing integration of tech into our everyday lives, the demand for skilled professionals to implement these solutions had to keep pace. Unfortunately for tech workers, however, it looks like times are changing.
Research shows that over 240,000 jobs have been lost in the tech sector in 2023. This is already 50% higher than in 2022, and is a figure that’s yet to flatline.
That said, it’s important to point out that many of these layoffs have been made by big tech companies — we’re talking the likes of Alphabet (Google), Apple, Meta, Amazon and Microsoft. For instance, Alphabet has let go of 12,000 workers in 2023, equivalent to 12% of its workforce. Outside of these corporations, there are still swathes of job opportunities being provided by smaller tech companies across several sub-sectors — for instance, SAP, fintech, and AI to name just three.
When it comes to big tech, however, it’s clear that something has shifted in 2023, so what’s going on?
Anticipation of a recession
Due to factors like rising interest rates, surging energy prices, and uncertainties in the world’s two largest economies, economists have spent a great deal of 2022 and 2023 predicting an imminent global recession. This hasn’t quite come to fruition, but that hasn’t stopped big tech companies preparing for the worst and cutting costs accordingly — including staffing costs.
A case in point comes from Microsoft. When announcing the cutting of 10,000 jobs in January 2023, the company’s chief executive Satya Nadella directly referenced the state of the global economy. He explained that Microsoft and organisations in every industry and region worldwide were showing caution “as some parts of the world are in a recession and other parts are anticipating one”.
Over-hiring during the Covid-19 pandemic
With a surge in digital activity during the pandemic, many big tech companies hired more employees during 2020 and 2021 to meet the demand for this. For instance, the number of people employed by Amazon doubled between 2019 and 2021 as more people shopped online, while the likes of Microsoft and Alphabet also saw their workforces grow significantly during this period.
However, as consumer behaviour returned to normal following the lifting of lockdown restrictions, there was no longer need for all of these new staff members. Like with the global economic situation, this reality was directly referenced by big tech businesses when laying off staff.
Meta’s Mark Zuckerberg stated: “At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected.”
The rise of AI and automation
The sudden explosion in the everyday use of AI and automation has also influenced employment decisions. The likes of ChatGPT and DALL-E have shone a light on just how powerful these technologies can be, and tech businesses are taking note. The more things that can be automated, the fewer things they need humans to do, and the more jobs they can give to robots.
Indeed, the likes of Alphabet, IBM and Dropbox have already started letting go of staff in favour of automated alternatives. For instance, Alphabet’s Pichai stated: “To fully capture [the power of AI], we’ll need to make tough choices. So, we’ve undertaken a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company. The roles we’re eliminating reflect the outcome of that review.”
Meanwhile, IBM CEO Arvind Krishna alluded to the power of automation when stating that the company expects to pause hiring for roles it thinks could be replaced with AI in the coming years.
So, does this all mean that tech workers should be considering switching careers? Not quite. It’s largely the bigger tech companies that are laying off staff, and many others in the sector are actually ramping up hiring efforts. Although it’s inevitable that automation will continue posing a threat to certain tech workers, it will also create opportunities for others, particularly when it comes to implementation of such tools.
The bottom line is this: tech workers will almost certainly always remain in high demand, even with what we’ve seen in 2023.
