Blog: Big Tech’s job-cut tsunami

Employee Relations

Big Tech’s job-cut tsunami

A closer look at the recent trend of job cuts carried out under the guise of cost-saving measures that can paradoxically lead to greater issues for top tech firms.
Big Tech’s job-cut tsunami

The tech industry has recently experienced a substantial upheaval in the form of widespread job cuts. Tech firms, including Amazon, Google, and Microsoft, have collectively laid off over 150,000 workers, sparking widespread concern as to the underlying causes of this unanticipated move.

Despite the commonly cited reason of cost-cutting measures, the real factors are far more intricate and multifaceted, encompassing everything from economic stagnation and supply chain disruptions to the ongoing conflict in Ukraine and the rapid advance of automation and AI.

Data sheds light on the pumped-up recruitment that took place during the height of the pandemic. As demand skyrocketed, tech companies embarked on a hiring spree, with Amazon alone adding an astronomical 746,000 new employees, resulting in a 93.5% increase in its workforce. 

Yet, even with this explosive growth, the company's recent downsizing is only expected to result in a meager reduction of 1.2% of its headcount.

In contrast, Apple has managed to sidestep layoffs altogether. With a workforce of 68,000, the tech giant has maintained stability through its approach to staffing and its CEO Tim Cook's pay cut

The claimed justification of cost-cutting may not be the sole explanation for these job cuts --rather this could be aimed at signaling to shareholders amidst the decline of tech stock values. These Silicon Valley giants are among the world's most valuable firms that boast impressive profits, as well as massive cash reserves. For example, Microsoft attempted to purchase video-game maker Activision Blizzard last year, offering a staggering $69 billion in cash, before federal regulators challenged the deal.

Layoffs are often seen as a quick fix for struggling companies, but the truth is, job cuts can lead to bigger problems. According to Bain & Co., downsizing can result in more costs than benefits, especially during short recessions. A study by Cigna and the American Management Association showed that post-layoff employees filed more medical claims, particularly for mental and heart-related issues, highlighting the negative impact of downsizing.

Some experts argue that AI and automation may also be contributing to the current state of affairs, as tech firms are increasingly leveraging these cutting-edge technologies in the pursuit of cost savings and streamlining workflows. For instance, Microsoft terminated 10,000 employees while simultaneously announcing a $10 billion investment in OpenAI, the creators of the ChatGPT app. Meanwhile, Google is believed to be developing its own AI-powered rival to ChatGPT.

Despite the recent job cuts, tech jobs still account for a tiny fraction of the US economy, and experts concur that these layoffs are likely a temporary blip in an otherwise thriving job market. Nevertheless, for those affected by the downsizing, the impact is significant.

Companies and governments are now competing for the attention of the unemployed tech professionals, offering competitive salaries, benefits, and equity packages to attract them. A recent survey conducted by ZipRecruiter found that 80% of tech professionals who lost their jobs secured another within three months of starting their search, with nearly 40% landing a new tech job within one month of being laid off.

The job cuts in the tech industry have placed a spotlight on the CEOs of these firms. Alphabet's Sundar Pichai and Facebook's Mark Zuckerberg have publicly taken responsibility for the layoffs, yet have yet to announce any reductions in their own remuneration.


The story of Big Tech's job cuts serves as a cautionary tale, warning against the dangers of rapid expansion, inflated hiring and the importance of stability. It’s a reminder that no job is immune to the winds of change. 

Yet, even as these tech titans shed thousands of white-collar professionals, the wider job market is still healthy, albeit reverberating with recession fears, and still offers ample opportunities for those affected by the downsizing to embark on new careers.

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Topics: Employee Relations, #Layoffs

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