As one of the United States’ largest private employers continues to downsize its workforce, the move is seen as a sign that the international technology sector is in for a rough 2023.
Massive layoffs at Amazon.com Inc. are being construed as a grim throwback to the dot-com bubble of the 2000s, as well as the global financial crisis of 2008 when even the biggest players in the tech scene, Microsoft and Apple, were forced to significantly downsize their workforce in order to reduce operational costs.
The ongoing downsizing measures being implemented by Amazon are a stark contrast to the way tech companies seemed to be hiring en masse throughout the past couple of years. And they aren’t the only ones: collectively, the tech industry’s global workforce has been reduced by over 150,000 workers over the past year.
According to Layoffs.fyi, a tracking site specializing in monitoring the downsizing trend, they expect the number to go even higher given the slowing growth seen in the world’s largest economies.
Indeed, according to Challenger Gray & Christmas Inc., an executive coaching firm, layoffs in the tech sector are up by a massive 649% from 2021 numbers.
Greg Selker, managing director for executive search firm Stanton Chase, opines that today’s layoffs are a preventive measure on the part of many companies in the industry so as not to find themselves in a similar financial bind experienced by the tech sector between 2008 and 2009.
Selker added that the ongoing layoffs and freeze-hiring measures give tech companies an advantage in the sense that they can make up for the aggressive hiring sprees that ran between 2020 and 2021. In truth, many industry executives admit that they hired excessively throughout much of the pandemic.
An Eerily Similar Situation
AJ Bell investment director Russ Mould pointed out that the hiring boom during the early days of the pandemic was fueled by virtually the same things as the dot-com boom of the noughts.
Back then, inexpensive labor (as many of those hired at the time were fresh out of college), high investor expectations, and a seemingly endless bankroll drove tech companies into a hiring spree in a bid to fire up their growth and expansion – a situation eerily echoed by tech firm HR departments over the past couple of years.
Then, as they now, companies ended up regretting their decisions when things went bust and they were forced to lay people off in order to remain operational.