As someone who has been in the tech industry for over 35 years, I was shocked, but not surprised, when multiple tech companies made headlines for laying off thousands of employees. Over 200K employees were laid off in 2022. So I tried to put things in perspective for my own understanding and here are three thoughts to share with you.
- It’s a boom and bust.
For these companies, aggressive and opportunistic hiring strategy during the pandemic to capture additional revenue led to rapidly expanding their organizations. Working from home, virtual classes, online shopping, visiting friends and family online, etc. required new apps and the supporting infrastructure to be built quickly. As the economy took a downturn, companies had to reset their workforce.
Below is some basic data for a few of the tech giants that I found interesting (source: Statista):
- Amazon has 1.5M employees, hired 812,000 of them in the last 3 years (= 125% increase), and recently laid off 18,000 employees (= 1.2% reduction). If you are a glass-half-full kind of a person, you would think that 794,000 employees still have their jobs.
- Microsoft has 221,000 employees, hired 90,000 of them in the last 3 years (= 68% increase), and laid off 10,000 employees (= 4.5% reduction).
- Google has 156,000 employees, hired 57,000 of them in the last 3 years (= 58% increase), and laid off 12,000 employees (= 7.6% reduction).
- Facebook has 83,500 employees, hired 48,000 employees in the last 3 years (= 134% increase), and laid off 11,000 (= 13% reduction).
Notably, Apple is not one of the tech companies with a layoff announcement (yet). If we look at their numbers, Apple has 164,000 employees, hired 32,000 of them in the last 3 years (= 24%) which indicates that they have not been on a hiring spree as others. Even if they do announce a layoff, it will likely be at a smaller scale.
- Laid off tech employees have soft landing opportunities in other industries.
According to a ComputerWorld article published in Jan ’23, despite the layoffs by the tech giants, “there are still over 200K tech job openings in the U.S.”. It is just that the possibilities in tech extend beyond the traditional tech industry to other industries like retail, finance, professional services, healthcare, insurance, travel, and others — all of which need technologists for upgrading and strengthening their online presence and business.
- Tech companies are now aggressively hiring in AI and AI related fields.
Despite the layoffs, the same tech companies are now aggressively hiring and investing in Artificial Intelligence (AI) and related fields (machine learning, deep learning, neural networks), data science, cybersecurity, robotics, and automation. In other words, they are disinvesting from areas of business that were not doing good (hence the layoffs) and investing in new, more promising areas (e.g., Microsoft’s latest $10B investment plan in OpenAI).
As of the latest 2022 data, the global AI market is worth $136.6 billion (Grand View Research) and can reach $15 trillion in the next decade (PwC). This is primarily because of increasing practical use cases of AI technology, from content creation to self-driving cars. That's why all the big tech companies from the chip vendors to infrastructure and software companies have been focusing on AI and related technologies. They have money and big guns!
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