The tech industry’s biggest companies have all recently made billion-dollar investments in newer technologies, including Al. These layoffs have coincided with these announcements. It is reasonable to question whether these computer titans, in spite of their abundant financial resources and smart workforce, are unaware of the fundamentals of acquiring personnel or managing a firm. Or is it a model of hire-use-throw-fire?
A tech recession is there? Actually, no. Is the tech sector experiencing a valuation bubble? Absolutely, to a degree. Are these big tech companies insolvent? Not at all; they have hugely cash surplus. They are declaring layoffs due to other businesses also doing so.
Source: Money Control
But, the end of the cheap money era and the beginning of a tighter monetary policy cycle also signal a shift in corporate mood. In contrast to larger industries that are still hiring, tech companies in the United States, where the FAANG platforms are mostly based, account for barely 2% of all employment. Thus, layoffs in the tech industry cannot be interpreted as a US economic slowdown just yet.
The IT industry benefited from the global increase in digital usage during the COVID-19 epidemic. More people spent more time online as a result of remote work. As a result, more people started using social media and shopping online. With this virtually instantaneous multi-fold growth, tech companies (including the smaller ones) embarked on a hiring binge, quickly and at high salaries.
Several tech companies are going through a mid-life existential crisis as a result of the rising commercialization of artificial intelligence (AI) products. These business strategies require a newer enterprise vigour and organisational culture in order to generate newer monetisable items and match the proper relevant skills. Layoffs can aid in this situation.
Source: CNBC International
Human resources positions make up about a quarter of all tech jobs eliminated in the last few months. One is that it suggests that corporations may hire fewer people in the near future. Second, and most importantly, commercially available Al-based HR solutions automate the entirety of the hiring process, onboarding new hires, including background checks and HR compliances, and even performance management.
Layoffs in the tech sector will be a common occurrence since these companies must maintain their competitiveness and ongoing profitability in a market that is frequently being disrupted by new innovations. The entities would therefore like to destabilise their organisational structures before they are disrupted. In the tech industry, there is always a struggle for talent. Not only is the talent being right-sized, but also right-stocked.
Share your views in the comments down below.
