A recent survey of 2,000 UK-based tech workers by CWJobs revealed that more than half are getting ready for potential layoffs due to uncertainties in the global tech sector. Concerns over job security have driven 53% of these employees to start seeking new job opportunities preemptively. The number of tech layoffs in 2023 has already hit 57,000 in just 25 days, following last year’s total of around 159,000 according to Layoffs.fyi.
The primary reasons behind these layoffs are attributed to inflation, the looming threat of recession, and the downturn in fortunes for many tech companies. Companies are downsizing, cutting costs, and facing diminishing financial valuations. This is happening despite the overall economy maintaining a low unemployment rate and a 3.2 percent growth rate in the third quarter.
For the past decade, investors seeking high returns poured money into Silicon Valley, funding a range of start-ups that may not have garnered support during less prosperous times. Overly high valuations made it easy to issue stock, take on loans for aggressive expansion, or offer enticing deals to gain market share rapidly.
The current hiring freeze in the tech sector is affecting existing employees and potential graduates aiming for opportunities in Silicon Valley. Recent mass layoffs include Meta CEO Mark Zuckerberg announcing layoffs equating to 13% of Meta’s global workforce.
Following suit, Twitter’s CEO Elon Musk reduced the social media giant’s workforce by approximately 50%. Twitter let go of about 4,000 employees, some of whom were rehired almost immediately, showcasing the confusion prevalent in Northern California tech companies. Amazon also reportedly laid off nearly 18,000 employees.
Spotify globally decreased its workforce by 6%, raising concerns about when the downsizing will stop. Spotify’s CEO, Daniel Ek, publicly attributed the company’s struggles to overestimating market assumptions.
“In hindsight, I was too ambitious in investing ahead of our revenue growth,”
London saw the highest percentage of employees preparing for layoffs, reaching 63%. Age also played a role, with 62% of tech workers in the 18-24 age bracket actively seeking new job opportunities due to fears of layoffs, compared to only 24% of workers over 55.
“Tech workers are showing signs of uncertainty around job security – likely triggered by what they are reading in the news and on social media,” said Dominic Harvey, director at CWJobs.
“Employers need to go the extra mile to reassure them and build a strong sense of security in their current role and long-term career prospects. This could be key to attracting and retaining much-needed talent over the coming months and years.”
Major tech companies like Amazon, Meta, Microsoft, and Google have collectively cut tens of thousands of jobs. Startups are also feeling the pressure, with companies like Paddle and Beamery reducing their workforce this month.
“The jobs market remains highly competitive – so if employees or candidates are made to feel insecure or uncertain at any stage, from the job advert through to employment, they will find plenty of opportunities elsewhere,” Harvey added.
Mark Zuckerberg recently took responsibility for the layoffs, acknowledging that the rapid hiring decisions were unwise. The company had hired many employees anticipating the online surge during the middle of the pandemic to continue, but there was no evidence supporting this assumption.
When companies view their hires as short-term solutions, it can have a detrimental impact on long-term productivity. Making hiring decisions with consideration for how they will impact the organization in the future can lead to more thoughtful choices.
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