In the past, tech companies had prioritized a \u201cgrowth at all costs\u201d mindset that meant profitability was viewed as a mere afterthought.[4]<\/sup><\/a> Sanjay Brahmawar, the CEO of the enterprise software firm Software AG says, \u201cfor years companies have said \u201clet’s just keep growing and we’ll figure out profitability somewhere down the road.\u201d[5]<\/sup><\/a> Since 2011, the tech industry has been growing year after year with explosive growth occurring after the pandemic.[6]<\/sup><\/a> In 2020 and 2021, sales sharply rose as new work-from-home orders put a heavy demand on tech companies, and more people and businesses relied on these technologies than before.[7]<\/sup><\/a> During the pandemic, tech hiring became progressively more competitive, with companies increasing pay packages and benefits across the board.[8]<\/sup><\/a> For instance, Amazon more than doubled its corporate staffing, and Meta doubled its employment headcount between March 2020 and September 2021.[9]<\/sup><\/a> This record-setting growth, however, could not be maintained forever, and we are currently experiencing a significant course correction triggered by an economic slowdown.[10]<\/sup><\/a><\/p>\n For a while now, investors were willing to let these tech companies spend needlessly so long as the share prices continued to grow by double-digits year after year reliably.[11]<\/sup><\/a> However, as internal costs rose and spending slowed, many companies faced shrinking profits and alarms from angry investors calling for a significant reduction in expenses.[12]<\/sup><\/a> The \u201cgrowth at all costs\u201d era seems to be ending for \u201cBig Tech.[13]<\/sup><\/a> Investors are instead shifting the focus towards profitability and efficiency, describing this as the \u201cnew normal\u201d for tech companies.\u201d[14]<\/sup><\/a> So, is this \u201cnew normal,\u201d led by investors, to blame for these tech layoffs? Michael Cusumano, deputy dean at MIT’s Sloan School of Management, believes that \u201cthese massive tech layoffs have more to do with investors than companies’ bottom lines. \u201c[15]<\/sup><\/a><\/p>\n As record-breaking growth is no longer feasible long-term, investors have instead set their sights on curbing expenses and are beginning to evaluate tech companies more harshly.[16]<\/sup><\/a> This means that the mass hiring of high-skilled professionals during the pandemic, with sizable salaries and pay packages to match, are the first to be cut as tech companies look to reassess their balance sheets.[17]<\/sup><\/a> All this has been done in an effort by tech companies to signal to investors that they are willing to focus on long-term growth by showing more fiscal responsibility in the short term regarding staffing.[18]<\/sup><\/a> This reorganization of tech companies likely caused these industry-wide layoffs.[19]<\/sup><\/a> However, they should not signal absolute doom to those interested in the industry’s success. Instead, these tech layoffs could indicate that the \u201cindustry is maturing or becoming more stable after rapid growth\u201d and that these tech companies are invested in a more sustainable path forward.[20]<\/sup><\/a><\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n [1]<\/a> Keerthi Vedantam, Tech Layoffs: U.S. Companies That Have Cut Jobs in 2022 and 2023<\/em>, Crunchbase News (Mar. 3, 2023), https:\/\/news.crunchbase.com\/startups\/tech-layoffs\/.<\/p>\n [2]<\/a> Amanda Hetler, Tech Sector Layoffs Explained: What You Need to Know<\/em>, TechTarget (Feb. 1, 2023), https:\/\/www.techtarget.com\/whatis\/feature\/Tech-sector-layoffs-explained-What-you-need-to-know.<\/p>\n [3]<\/a> Tripp Mickle, Tech Layoffs Shock Young Workers. The Older People? Not So Much.<\/em>, N.Y. Times (Jan. 23, 2023), https:\/\/www.nytimes.com\/2023\/01\/20\/technology\/tech-layoffs-millennials-gen-x.html.<\/p>\n [4]<\/a> Leslie Picker & Ritika Shah, Tech Private Equity Investor Orlando Bravo Says the Mantra of \u201cGrowth at all Costs\u201d is Over<\/em>, CNBC (Mar. 3, 2023, 11:24 AM), https:\/\/www.cnbc.com\/2022\/03\/03\/tech-private-equity-investor-orlando-bravo-says-the-mantra-of-growth-at-all-costs-is-over-.html.<\/p>\n [5]<\/a> Will Daniel, How to Navigate the Stock Market\u2019s \u201cNew Normal\u201d After the Last 2 Decades of Investing Became Ancient History<\/em>, Fortune (June 4, 2022, 6:30 AM), https:\/\/fortune.com\/2022\/06\/04\/tech-stocks-investing-new-normal-end-of-growth-at-all-costs-era\/.<\/p>\n [6]<\/a> The Future of Big Tech<\/em>, J.P.Morgan (Dec. 23, 2022), https:\/\/www.jpmorgan.com\/insights\/research\/future-of-big-tech.<\/p>\n [7]<\/a> Why Are Tech Companies Laying Off All These Workers?<\/em>, Forbes (Jan. 27, 2023 10:50 AM), https:\/\/www.forbes.com\/sites\/qai\/2023\/01\/27\/why-are-tech-companies-laying-off-all-these-workers\/?sh=30a34e764fc6.<\/p>\n [8]<\/a> Id.<\/em><\/p>\n [9]<\/a> Clare Duffy, How Big Tech\u2019s Pandemic Bubble Burst<\/em>, CNN (Jan. 22, 2023, 8:11 AM), https:\/\/www.cnn.com\/2023\/01\/22\/tech\/big-tech-pandemic-hiring-layoffs\/index.html.<\/p>\n [10]<\/a> Big Tech Layoffs \u2013 A Meltdown or Course Correction? Harvard Prof Ranjay Gulati Explains<\/em>, The Econ. Times (Nov. 10, 2022, 11:16 AM), https:\/\/economictimes.indiatimes.com\/markets\/expert-view\/big-tech-layoffs-a-meltdown-or-course-correction-harvard-prof-ranjay-gulati-explains\/articleshow\/95418482.cms?from=mdr.<\/p>\n [11]<\/a> Jake Swearingen, Wall Street Ignored Big Tech\u2019s Bloat During Boom Times. Now It\u2019s Ready to Slide and Dice<\/em>, Insider (Nov. 17, 2022, 2:03 PM), https:\/\/www.businessinsider.com\/tech-layoffs-meta-alphabet-wall-street-2022-11.<\/p>\n [12]<\/a> Hetler, supra<\/em> note 2.<\/p>\n [13]<\/a> Daniel, supra<\/em> note 5.<\/p>\n [14]<\/a> Id.<\/em><\/p>\n [15]<\/a> Forbes, supra<\/em> note 7.<\/p>\n [16]<\/a> Id.<\/em><\/p>\n [17]<\/a> Bobby Allyn, 5 Takeaways from the Massive Layoffs Hitting Big Tech Right Now<\/em>, NPR (Jan 26, 2023, 5:00 AM), https:\/\/www.npr.org\/2023\/01\/26\/1150884331\/layoffs-tech-meta-microsoft-google-amazon-economy.<\/p>\n [18]<\/a> Forbes, supra<\/em> note 7.<\/p>\n
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