Thousands of individuals have lost their employment in the computer sector in recent months as a result of job layoffs. The layoffs were communicated via private emails, the Slack messaging service, and even Twitter. Engineers working on artificial intelligence are no longer guaranteed a job, while marketing and human resources professionals have also been laid go. According to a forecast by outplacement company Challenger, Gray & Christmas, the IT sector will shed 97,171 jobs by 2022. This was more than seven times the number of employment lost in the IT industry in 2021, when 12,975 were eliminated.
The IT industry has been the most impacted of all, accounting for more than a quarter (27%) of all employment cutbacks in the United States (363,824 jobs) last year. The trend is expected to continue in 2023, with Microsoft and Alphabet announcing 10,000 and 12,000 job layoffs in only 48 hours, respectively. According to data company Layoffs.fyi, 38,815 IT jobs were lost in the first 20 days of the year. 133 companies have announced worker cutbacks. Apple is the only big technology business that has not announced layoffs.
The layoffs represent a new reality for the tech sector, which had been recruiting at breakneck speed in 2020, 2021, and 2022 as the global economy became increasingly dependent on technology. During the two years of covid lockdown, the sector had become the way for social connections. Consumers purchased online and communicated extensively via technological services. However, the economy is presently faltering, owing mostly to inflation. Prices for goods and services in many Western countries are at their highest levels in 40 years, causing central banks to hike interest rates, making credit more costly to obtain.
Many experts in the United States predict that the fast rise in interest rates would result in a so-called hard landing in the economy – a recession. When the economy is strong and confidence is high, the technology industry performs well. When things are going well, consumers are more likely to spend money on technology services. However, if the economy deteriorates, people become more conservative, prioritising critical purchases above technology.
“Over the past two years we’ve seen periods of dramatic growth,” Google CEO Sundar Pichai said in an email to employees. “To match and fuel that growth, we hired for a different economic reality than the one we face today.”
“As we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less,” Microsoft CEO Satya Nadella said in a letter to workers on Jan. 18. “We’re also seeing firms across all industries and geographies exercise prudence, since some regions of the world are in a recession and others are preparing for one.”
Despite the fact that huge IT businesses are reducing employees, they are nonetheless highly lucrative and have large revenues. Last quarter, Microsoft recorded a net income of $17.6 billion and revenue of $50.1 billion. For its part, Alphabet recorded a net income of $13.9 billion on revenue of $69.1 billion. The employment losses indicate that the IT sector is bracing for a slump as corporations prepare for the year 2023. The next two years are projected to be the most difficult, as demand normalises following the pandemic.
