What the recent mass tech layoffs mean

February 10, 2023 | 05:00 pm PT
Le Van Thanh Google solution architect
The moment I landed on Hanoi's Noi Bai International Airport for the Tet holiday, I received an email from CEO Sundar Pichai about Google’s massive layoff of 12,000 employees. The mail was titled "A difficult decision to set us up for the future."

The decision was effective immediately in the United States. Several of my coworkers on the other hemisphere had lost their jobs that day. Some only knew what happened because they couldn't open their emails, or because they couldn't get past the security gate at the office. Procedures for those in Asia were slower due to local regulations, but employees there, too, would soon feel the impact.

Before Google made the announcement, other tech giants like Meta, Amazon, Salesforce and Microsoft also announced mass layoffs. A website specialized in monitoring layoffs revealed that in January 2023 alone, 272 tech companies had fired 86,882 employees, 50% more than the number of those who were let go for all of 2022. And there was no sign of things slowing down.

In the last 10 years that I spent working for foreign tech companies, I have witnessed multiple layoffs and restructurings, but I have never seen anything like this. Many people saw the waves of layoffs like an epidemic crashing over the tech world, but there's something they should know. This isn't a sign of decline for the tech industry, but actually a re-adjustment following periods of too rapid growth.

Over the past few years, the tech industry has hired a lot of workers. During the Covid-19 pandemic, while other industries took heavy hits, the tech world seemingly thrived. My former company, Salesforce, had only around 35,000 workers in 2019, but that number skyrocketed to 56,000 in 2021. At the end of 2022, Salesforce also had a massive layoff, with 8,000 workers being let go. The firm's co-founder and CEO explained that the company had hired too many people when it saw how revenue soared during the pandemic.

Alphabet, which owns Google, had around 119,000 employees in 2019, and the number rose to 156,000 in 2021. The recent layoff, which saw 12,000 workers being let go, therefore does not seem like much, considering how 37,000 more employees were added to the workforce since 2019. Sundar Pichai also justified the layoff with a similar explanation: "Over the past two years we've seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today."

Another factor that contributed to the layoffs was reduced spending on sales and advertisements. Tech firms usually provide technical solutions with operations, advertisements and sales for businesses from other industries. During the first phase of the pandemic, firms had no choice but to rely on technology for remote working, e-commerce and running other online platforms. But following the peak of Covid-19, business still proved to be difficult when people had lower purchasing power, forcing firms to cut down tech investments and advertising spending.

These factors have considerably and understandably impacted tech giants, whose main business models revolve around advertisements, such as Google, Meta, Amazon and Salesforce. And once one domino falls, the others will eventually follow.

Among those who were laid off, there were actual tech workers like programmers and software engineers, but these were the minority. Most of the people who lost their jobs were actually part-time workers and those working in finance, operations, sales and marketing. These staffers can work in multiple industries, not just tech. They left their sectors earlier on to get into the tech industry amid a tech hiring boom. Now, the balance has returned.

One thing I have to note is that these people were laid off not because they were incapable. Inefficient workers are laid off in a separate procedure that's done yearly. But this wave of layoffs, spurred by an adjustment to business strategies, affected everyone. This was apparent when I looked at the Linkedin profiles of many who were laid off.

Technology remains an important foundation for each and every business in every industry. Demands for tech workers are still very high as a result. These mass layoffs by tech giants can serve as an opportunity for small and medium businesses to hire high-quality employees.

Today's world is defined by a concept called "VUCA": volatility, uncertainty, complexity and ambiguity. These factors would massively shift the relationship between businesses and workers. Employers would be more decisive than ever when it comes to laying off employees in order to adapt to the changing times. What workers can do is always be prepared by equipping themselves with knowledge and skills for self-development, so they can be ready to tackle any situation they may face.

*Le Van Thanh is a Solution Architect at Google in Singapore.

The opinions expressed here are personal and do not necessarily match VnExpress's viewpoints. Send your opinions here.
go to top