2023 has been a shaky year for staff in the tech industry, with an estimated 200,000 employees laid off in the first five months. Technology firms have seen better days.
What was once a solid employment sector faces significant cutbacks. The headlines show thousands of people at risk of losing their jobs.
Here's why the economy, interest rates and pandemic hiring might be to blame.
Tech layoffs explained
The tech sector increased staff layoffs by 649% in 2022 - double that of previous years. Most releases are from household-name companies known for their durability. But this was challenged by over-hiring during the Covid-19 pandemic. During the dot-com bubble, investors pumped money into internet-based start-ups. This made employee movement less of an issue. Present-day tech companies don't have that luxury and need more employee retention.
The pandemic shifted everything online. People spent more and more time on screen. Quarantine regulations, WFH, on demand films, online shopping and education are all to blame.
Tech companies saw record-high earnings due to this increased online activity. This in turn sparked a recruiting frenzy to meet demand.
Meta nearly doubled its employee headcount in March 2020. The company reported 48,268 staffers and more than 80,000 by September 2022. But in November 2022, the company announced it was laying off 11,000 employees. What is the reason for staffing inconsistencies in one of the largest tech firms?
Year of efficiency
Meta faced persistent losses in revenue and increased competition. Significant losses in its Reality Lab segment were also a problem.
Zuckerberg and many CEOs have taken responsibility for over-hiring earlier in the pandemic. But employees allege that Artificial Intelligence (AI) is to blame for worker cuts. And that 'over recruiting' has been covered up to avoid disputes about robotic job-replacement charges.
Telecommunication staff cuts
Telecommunications firms are the cornerstones of the digital world. They provide worldwide connectivity and communication. British multinationals such as Vodafone and BT have experienced big challenges recently. And these too have resulted in widespread personnel reductions.
Margherita Della Valle, Vodafone's chief executive, say the telecoms giant is 'struggling'. The company plans to simplify its organisational structure over the next three years. This should enhance departmental efficiency and effectiveness.
BT, a close rival of Vodafone, has also announced its plans to become a 'leaner business'.
Both statements from leading network providers show plans for a workforce reshuffle.
In BT's case, AI is the direct cause of staff replacement. The company has declared it will replace 10,000 jobs which accounts for 40% of its global employee base.
'There were huge opportunities to implement Artificial Intelligence in our organisation'. So said BT's boss Philip Jansen, adding that 'BT would use AI to deliver better customer service and drive customer needs'.
While reducing operations may help telecom businesses become more competitive, customers are concerned about the impact on service quality and support.
Vodafone and BT have responded by emphasising their commitment to sustaining service excellence.
While these steps may present obstacles in the short term, corporate executives emphasise the long-term benefits of simplifying processes and remaining competitive. There is a need to strike a balance between cost optimisation, and providing a service that satisfies the growing needs of customers. Particularly, as the sector evolves in an increasingly connected environment.
Fixing the skills shortage
Re-skilling programmes to support employees laid off by Technology exist. Both businesses and governments have developed them. People laid off by Tech can get the skills needed to thrive in a dynamic job market by investing in training efforts. Or so says the government. A lifelong learning culture is needed so that workers continually adapt to the changing needs of the tech industry.
Improving leadership in tech
Tech firms must engage visionary leaders who understand the importance of investing in people. Since implementing AI in major tech companies, employees have lost faith in their ability to maintain their jobs. It appears to them that the market favours robotic automation over an upgraded workforce.
Managers need to create learning opportunities for their employees. Clear expectations need to be set and a growth mentality adopted. Managers should emphasise the advantages of learning and development while encouraging employees to embrace change and get the skills necessary to contribute to a rapidly evolving tech landscape.
Additionally, businesses should think about alternatives to laying people off. For instance, assignment rotation enables individuals to gain expertise in various organisational areas. By doing this, they diversify their skill sets and gain a greater understanding of the sector without having to move on. Companies should tap into their existing talent pool and offer jobs internally.
Business Recovery
Many industries are in recovery since Covid. The economy's instability, a talent deficit, and a lack of resources don't help. But one sector in tech is beating the odds.
The IT sector's adaptability and endurance continue to be its fundamental characteristics. The industry can rise above economic adversity with strategic planning, investments in human resources, and a focus on innovation.
With support from industry leaders and decision-makers, a better future lies ahead for the tech sector and its workforce.
The modern tech employee must advance with the times. While widespread layoffs pose challenges for tech professionals in the short term, the future is promising for those who remain flexible, adaptable, and dedicated to lifelong learning.
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