Job Security in Tech Sector Questioned as Mass Layoffs Persists
The trend of employment instability has penetrated the tech industry, as businesses worldwide witnessed massive job cuts last year. The situation has continued into the current year with not just startups, but also major technology corporations pruning their workforce.
According to Layoffs.fyi, a total of 209 IT companies have dismissed 50,312 employees since the beginning of this year. Moreover, a startling figure from 2023 reveals that 1,191 companies laid off 269,180 employees collectively. Major tech giants, including Alphabet, Amazon, Cisco, eBay, Meta Platforms, Microsoft, SAP, and Unity Software, have contributed to these layoffs. Similar actions were seen by PayPal, which announced plans to lay off approximately 9% of its workforce, equivalent to 2,500 employees earlier this year.
Challenger, Gray & Christmas, a transition consultancy firm, highlights the issue’s enormity in the IT sector. The firm compares the current downsizing scope second only to the dotcom bubble period of 2001, which led to significant investor losses and numerous bankruptcies due to a surge in unprofitable internet startups. However, data suggest a 55% reduction in IT layoffs from January to February 2024 compared to the corresponding period the prior year, which saw 63,216 individuals lose their jobs.
Interestingly, the layoffs figures noted by Challenger, Gray & Christmas slightly differ from those calculated by Layoffs.fyi, who reported 28,218 job cuts in the IT sector from January to February 2024, with February accounting for 12,412 terminations. These statistics may worry IT professionals who were previously in higher demand. A CNBC survey indicated increased competition for many specialists searching for IT jobs.
Another concern for IT professionals is the stagnation in the formerly rapid wage growth within the tech sector. Layoffs.fyi’s data reveals virtually no increase in wages over the past two years. Nevertheless, IT professionals continue to earn high incomes. For example, Comprehensive.io reports that AI professionals at the entry-level could earn between $109,500 and $138,500 annually. Those leading teams or managing business processes earn between $178,500 and $310,050 per year.
Last year, tech companies justified staff reductions as necessary for business optimization, citing high inflation, weak consumer demand, and an active hiring phase during the COVID-19 pandemic as causes. Although inflation rates have significantly dropped this year, and many IT companies possess funds, layoffs persist. Analysts suggest that such policies are driven by the quest for improved financial performance, thus boosting company shares.
