Tech layoffs - perspective is everything

Tech layoffs - perspective is everything
New world - missing expectations. Mix of Midjourney and Dall-E

We are only in the first weeks of 2023, and January has been already a record-breaking month for the whole tech sector in terms of layoffs, according to TrueUp over 70k people in tech have been fired (edit: 75k now).
Even as many companies (Microsoft amongst them) report record-breaking profits, cash on hand, and have successful investments (ex. MS and OpenAI deal) , let's take a look at why suddenly "its a thing" 🕵️, top 5 reasons:

  • 🌪️ Uncertainty
    (inflation, gloom of recession, war, and supply issues)
  • 🔍 Lack of "next-big-thing" (vision)
    (no promise of future gains, VR is a long shot, smartphones saturated the market, AI is the best bet)
  • 👀 Peer pressure
    (competitors doing it, shareholders are expecting this)
  • 📸 No PR damage
    (competitors did it so bad that anything is "better than Twitter" at this point)
  • 📈 Overhiring
    (bad estimations)

With all the above we get what we have:


Current layoffs in FAANG look still more like a correction and not (yet) a major indicator for the tech sector. Take a look at the perspective with previous years:


This is the true cost of too-optimistic estimations & shareholder's pressure.


Personal takeaway: sometimes we all need an Auriga - a person who will whisper "Memento mori" ("remember you are mortal") to our ear when we present our overly positive goals to others. Also asking "what if I'm wrong" is not a bad habit.

EDIT: This is a good visualization from Benedict Evans that it is a short-term correction, and not a new trend:

Side points

That are too short for an article but worth mentioning: