U.S. tech companies have laid off 34,000 jobs this year, but it's very different from the past two years

Highlights:

• 1

  In 2023, the U.S. tech industry began to shrink after pandemic-era expansion, laying off a total of 263,000 jobs.

• 2

  At the beginning of the new year, 138 technology companies in the United States have announced layoffs, with a total of 34,000 layoffs.

• 3

  Unlike the past two years, the new round of layoffs has focused on reallocating resources and allowing companies to focus on new areas such as AI.

Tencent Technology News According to foreign media reports, at the beginning of the new year, in order to promote future growth, American technology companies that are intensively investing in new fields such as generative artificial intelligence have reconfigured human resources, including Microsoft, eBay and PayPal, technology companies have laid off a total of 34,000 employees.

So far this year, 138 U.S. tech companies have made layoffs, according to data compiled by Layoffs.fyi, a U.S.-based website that publicly tracks layoffs at startups and tech companies. Among them, companies such as Microsoft, eBay, PayPal and Snap have laid off thousands to hundreds of employees.

Data from Layoffs.fyi also shows that the number of layoffs in the U.S. tech industry this year is still relatively low compared to the same period in 2023. 2023 began with big tech companies, including Meta, Amazon, and Microsoft, beginning to lay off employees aggressively after experiencing a boom in overinvestment during the pandemic. Throughout 2023, the U.S. tech industry will lay off a total of 263,000 jobs.

Market analysts say the latest round of layoffs shows that U.S. tech companies are reallocating resources to invest in new areas such as generative AI. At the same time, their layoffs have signaled to shareholders that they will continue to focus on cost control. Brent Thill, an analyst at investment bank Jefferies, said tech companies had been evaluating their employees and concluded, "We have a bunch of 'rotten wood.'" If we had a leaner organization, we could do more. Layoffs will continue, and the situation could get worse. The layoffs, which have affected the entire tech industry, have become extremely contagious. ”

Daniel Keum, an associate professor of management at Columbia Business School, said tech companies are reevaluating priority areas for investment and laying off workers in costly but non-core departments, such as Amazon, which announced this year that the Twitch video streaming platform would lay off hundreds of jobs. Companies including Amazon, Microsoft, Meta, Google's parent company Alphabet and music streaming service Spotify have all said they plan to strike that balance this year. Daniel Ek, Spotify's chief executive, said this month: "We need to improve efficiency by deprioritizing some of our existing businesses, but we also need to invest in new businesses." ”

During the pandemic, U.S. tech companies have been hiring on a massive scale. Before these companies massively cut costs last year, it was already realized that the post-pandemic shift to a more digital-focused lifestyle didn't last.

Autumn Mitchell, a quality assurance tester at ZeniMax, Microsoft's video game subsidiary, said: "Anyone who works in tech or gaming right now is worried in some way that they or someone they know will lose their job. When you see a company announcing layoffs, you think, 'Which company will be next week?'"

Coomb said the beginning of the year is usually a time when companies are planning for the next 12 months, and it can also be a period of disproportionate layoffs. He said that the layoffs at the beginning of the year by U.S. tech companies appeared to be more strategic than seasonal, just as 2022 and 2023 were "reasonable adjustments" to the post-pandemic workforce, but the layoffs at the beginning of the year were accompanied by "aggressive hiring."

Meta has laid off more than 20,000 employees since the end of 2022 as investors complain that building the "metaverse" has cost the company more than $10 billion. The company said this month that despite its "significant investments" in generative AI, including access to talent, headcount growth this year will be "minimal".

Meanwhile, enterprise software company SAP unveiled a "company-wide transformation" in January, which included layoffs of about 8,000 people due to an increased focus on artificial intelligence. The company said the headcount will be "similar to current levels" by the end of 2024. Derrick Wood, an analyst at investment bank TD Cowen, said: "SAP's statement makes it clear that this is not a net layoff. ”

Snap said this month that it would lay off 10% of its workforce globally. Since 2022, the company has carried out multiple rounds of layoffs. The most recent was in November 2023, when the company made small layoffs in its product division. The last round of mass layoffs was in August 2022, when the company announced a 20% layoff and restructured its business lines. Regarding Snap's layoffs, Qom believes the move is crucial to the social media company's survival over the next two years. "When we talk about Amazon, Meta, Google, it's a very different type of layoff," he said. (Compiler/Mowgli)