We just stepped into the new year, but the tech companies seem to be standing in the same spot, restructuring their businesses. Will this restructuring spree make or break the tech industry? Let’s find out.
There was a time when job seekers saw the tech industry as a bed of roses. Today, the narrative has changed into a crown of thorns!
Well, because tech companies are changing the way they used to operate. They are restructuring their businesses and are determined to continue their layoff spree.
But the question is, why are these companies restructuring and laying off employees?
Reason Behind Restructuring the Tech Industry
The bitter truth is that the tech industry has experienced a slow and painful decline in 2022. During the pandemic, the tech industry haloed in the dark. They recorded blockbuster profits and needed to hire employees to meet the rising demand. They were the ones who gave rise to work-from-home jobs.
Everything was great until inflation came into the picture. To tame inflation, the central banks worldwide started hiking rates aggressively, leading to an economic slowdown and rising fears of recession.
At this point, the tech companies experienced that they were not shielded from the slowing economy and hence had to cut costs somewhere to meet ends. And then started the layoff story.
Layoff Story Continues
On 5th January 2023, Amazon announced that they were sacking 18,000 employees, almost 3% of their workforce. They claim that they are sacking employees because of the uncertain economic climate.
This will be their second round of layoffs, as they had laid off 10,000 employees in November 2022. Moreover, their quarterly YoY revenue growth has tanked tremendously compared to the pandemic. So, to cut costs, it chose to lay off its employees.
Well, Amazon is one of many companies laying off employees.
- Apple has paused hiring for various roles except for research and development.
- Adobe Inc has eliminated about 100 jobs in sales.
- Cisco has announced it is to axe nearly 700 jobs as a part of its restructuring phase.
- According to its restructuring plan, Salesforce is said to cut 10% of its global workforce.
And the list goes on.
Is Restructuring Making or Breaking the Tech Industry?
According to Economic Times, 2022 was the worst year for the tech IPO market since the global financial crisis of 2008. The tech company stocks turned from diamonds into duds. By the end of 2022, the stock price of Meta plunged by 64%, Amazon fell by 45%, and other majors like Apple and Google dropped by at least 24%.
According to Business Today, Indian tech companies generated $396 billion in US sales in 2021. So, it is safe to say that the tech companies in India and those in the US offer business to each other. So, it is evident that the scenario in the US will have an impact on Indian tech companies as well. In 2022, renowned Indian tech companies like Infosys, HCL Technologies, and Wipro have plunged dramatically.
Now, how will the implications of restructuring and layoffs affect the tech industry? Time will tell. All we can do is hope for the best.
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