Ahmed Sherif
Research expert covering IT services and gaming hardware
In the face of a tumultuous global economy, 2023 proved to be a challenging year for the technology sector, marked by an unprecedented wave of layoffs that swept across the globe. Layoffs in the technology sector escalated significantly in 2023 amid growing economic uncertainty. As of December 2023, more than 262,000 employees at tech companies worldwide had been laid off during the year across more than 1,180 firms. More than two-thirds of the layoffs occurred in the United States, where major companies and startups alike have had difficulty maintaining their profit margins. In an environment characterized by concerns about high inflation, rising interest rates, slowing economic growth, geopolitical tensions, and supply chain disruptions.
Although job losses at tech noticeably decreased by the second half of 2020 through to mid-2022, tech layoffs re-emerged in the second quarter of 2022 amid changing consumer preferences, global economic disruptions, and a turbulent stock market. By 2023, tech layoffs reached a staggering peak with over 167 thousand employees laid off in just the first quarter. This figure not only set a record for the highest number of job cuts in a single quarter, but it also surpassed the total layoffs announced throughout 2022, marking a challenging start to 2023 for the technology industry before declining again towards the end of the year.
Meanwhile, the tech giant Amazon topped the list for the highest number of employee layoffs in 2023. The company let go of over 17,200 employees in six distinct rounds amid a declining revenue growth rate. Amazon’s CEO attributed these layoffs to various factors, including a shift in the company’s priorities, an uncertain economic climate in 2023, apprehensions about the economy in 2024, and previous overstaffing. Similarly, Microsoft also laid off more than 11,000 employees in 2023, citing “macroeconomic conditions and changing customer priorities”.
What has led to an increase in layoffs?
Significant job losses in the tech sector first began trending at the beginning of the coronavirus pandemic, when almost 70,000 employees at tech companies lost their jobs in the first and second quarters of 2020. This was due, in part, to lockdowns and mobility restrictions that forced companies to reduce costs. At that time, tech companies in sectors such as transportation, finance, and travel were the most affected.Although job losses at tech noticeably decreased by the second half of 2020 through to mid-2022, tech layoffs re-emerged in the second quarter of 2022 amid changing consumer preferences, global economic disruptions, and a turbulent stock market. By 2023, tech layoffs reached a staggering peak with over 167 thousand employees laid off in just the first quarter. This figure not only set a record for the highest number of job cuts in a single quarter, but it also surpassed the total layoffs announced throughout 2022, marking a challenging start to 2023 for the technology industry before declining again towards the end of the year.
Notable examples
As of December 2023, tech firms such as Meta, Amazon, Twitter, Uber, and Microsoft had trimmed their headcount, citing multiple reasons including over hiring and restructuring due to rapid growth, and economic uncertainties facing firms in 2023 ahead of a looming recession. In January 2023, Google, for example, laid off around 12 thousand employees - around six percent of its total workforce – citing economic uncertainty and recession fears.Meanwhile, the tech giant Amazon topped the list for the highest number of employee layoffs in 2023. The company let go of over 17,200 employees in six distinct rounds amid a declining revenue growth rate. Amazon’s CEO attributed these layoffs to various factors, including a shift in the company’s priorities, an uncertain economic climate in 2023, apprehensions about the economy in 2024, and previous overstaffing. Similarly, Microsoft also laid off more than 11,000 employees in 2023, citing “macroeconomic conditions and changing customer priorities”.
What is the forecast for 2024?
Looking ahead, layoffs are likely to continue at some tech companies for the moment, with 84 percent of business leaders of IT companies reporting that they are concerned about a recession in 2024. That being said, the longer-term outlook for tech industry employment looks promising: by 2033, U.S. tech employment is forecast to expand from 5.78 million people to more than 6.77 million.
