Over 5.5 lakh tech layoffs in last 2.5 years: What's driving the IT sector's crisis?

In the past 2.5 years, over half a million tech professionals have lost their jobs worldwide, according to Layoffs.fyi, a tracker of industry layoffs. Debarghya Das, a former Google engineer and tech influencer, highlights that this staggering figure includes 132,000 layoffs in the first eight months of 2024 alone, with major companies like Cisco and Intel contributing 21,000 of those. The numbers also show 264,000 layoffs in 2023 and 165,000 in 2022. With such significant disruptions, the pressing question remains: what¡¯s driving these widespread job cuts?

132,000 tech layoffs 8mos into 2024, with Cisco and Intel accounting for 21,000.

264,000 in 2023.
165,000 in 2022.

More than half a million in the last 2.5 yrs.

¡ª Deedy (@deedydas) August 22, 2024

Reasons behind mass tech layoffs

There are several reasons for the recent tech layoffs:

AI investments: CNBC reports that AI is a major factor, not just because machines might replace human jobs, but because companies need to invest heavily in AI infrastructure. This requires freeing up cash that might otherwise go towards hiring.

Credit: Unsplash

Abatement of post-pandemic overhiring: During the pandemic, the rise in online activities led to record profits for tech companies and a hiring spree. As demand normalised, many companies had to correct their overexpansion, resulting in layoffs.

Inflation and interest rates: The US Federal Reserve¡¯s rate hikes in 2022, designed to tackle high inflation, increased borrowing costs. This has forced tech companies to scale back on growth and hiring to manage their higher debt expenses.

Why are tech layoffs happening - what do people think?

A Reddit thread asks, ¡°Why is tech seemingly having more layoffs than other industries currently? It seems like half of my friends have been laid off from their roles as senior software developers or IT managers. When I ask them about it, they all say that work didn't seem any slower than before.¡±

In the discussion, several explanations emerge: One wrote, ¡°Because it was insanely over employed,¡± while another said, ¡°They think AI is gonna do everything.¡±

Credit: Pexels

Someone else pointed out: ¡°When everyone was working from Home, companies hired more than they could, now they realise they don¡¯t need them as much. Then with the advent of generative AI, they are realising they can do more with less, so they are investing on that side of the industry, while laying off people to look good in their quarterly report.¡±

But what is also worth noting is that, given the large number of employees at tech giants, even a small percentage of layoffs can result in thousands of job losses.

For more information on exams, results and careers, please visit Indiatimes Education.