In recent months, news about mass layoffs in the tech industry has been quite common and had significant impacts worldwide. From tech giants like Meta and Twitter to local startups like Shopee, layoffs came with no warning, leaving many workers scrambling to find new work and those who remained are now fearful that may be next in the subsequent layoffs that companies may call at any time.
While layoffs are not uncommon, why is it happening too often and why are they mass layoffs? Here are some of the reasons why tech companies are suddenly ordering mass layoffs:
Sorting Out The Negative Impacts Of Pandemic Hiring
One of the major reasons tech companies are ordering sudden mass layoffs is due to the complications brought on by the pandemic.
During the pandemic, tech companies hired left and right to keep up with the demand for their products and services and offered lucrative salaries for their employees.
However, when the new normal came to be and people became used to the pandemic, tech companies found themselves having many workers but not many tasks for them to do. A layoff would lessen their expenses immensely to sustain these workers and fight their competition for tech talent.
Reduce The Asking Salary In The Industry
Tech companies have also ordered layoffs because they want to reduce the asking salary in the industry, which is putting a strain on their already strained finances.
According to the statistics collected by the Singaporean Ministry of Manpower (MOM) from 2001 to 2022, salaries in the information and communication sector – where most tech companies are classified – have increased by 75% from S$3,480 in 2001 to S$6,092 in 2021.
Because of this trend, some companies have to invest a lot of money to compete for tech talents in the small job market. The competition further pushes the asking salaries higher and makes the problem even worse.
A layoff would enable these tech companies to reduce the asking wages and make asking salaries more reasonable, regardless of the small talent pool.
Tech companies want to reduce the impacts a possible recession can have on their business. A recession often entails lower consumer spending, which means lower advertising spending for companies. Companies that depend on advertisements, like Meta, would lose a lot of revenue, affecting their finances.
While this is only short-term, companies must be careful with their finances until the volatile period is over. As mentioned above, a layover can reduce spending, especially on salaries and benefits.
If you are hoping to join tech companies, whether locally or in their global offices, it is important to know that layoffs can be announced at any given time as long as there is uncertainty in the industry.
It is best to do your research first about the tech companies you plan to join, whether they have announced layoffs in recent months and see if there are other opportunities you can fall back into in other companies. It pays to be careful in these uncertain times, and the rewards can be extraordinary if you are patient.
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