Tech layoffs: It's business, not personal

It's not that they don't want you, just that they do not need you anymore. Or, so they think

In early January 2017, I found myself without a job when they shut down my entire department. My well-wishers thought I was an idiot for not seeing it coming. The not-so-well-wishers said I was the idiot who had it coming. For years used to being courted by prospective employers, I could not come to terms with the fact that my existing employer did not want me anymore.

Long story short, I know the pain of losing one’s job. I can understand the pathos in the LinkedIn post by Justin Moore, who, after he became one of the 12,000 sacked by Google, wrote: “… employers — especially big, faceless ones like Google — see you as 100 per cent disposable.” But that doesn’t mean I fully agree with Mr Moore. Now that I look back, it is not that my employers did not want me, it is just that they did not need me anymore. Or, so they thought.

Thousands in the global technology sector, where 166 companies have laid off more than 65,000, would be grappling with those thoughts as some leaders of today’s Big Tech Club face their first true trial by reality.

Yes, there was the dotcom crash at the beginning of this century. Between 2001 and 2005, the global tech sector reportedly lost a quarter of all jobs. But some of today’s tech leaders, such as Meta Platforms, which owns Facebook, did not even exist at that time. And Google was still, erm, searching for ways to grow.

Tech companies have grown furiously in the decade and a half since the financial crisis of 2008. Insulated from the core of the turbulence, real estate, they teed off as returns from investments in internet backbones, fibre optic networks and technological innovations kicked in. Reports say tech companies around the world hired 100,000 every year from 2011 to 2021, before increasing the number more than two-fold after the pandemic struck. Now they pause for breath as the time to recalibrate beckons.

This recalibration is necessitated by an inevitable shift of the economic cycle marked by the realities of the post-pandemic world. As CEO after CEO said in grim layoff announcements, they over-hired during the pandemic, a period that made technology more mainstream than ever by integrating it with the way we worked, played, entertained, shopped, and socialised. Some of that integration — evident in the upheavals in education technology — is unravelling as the physical world reclaims a part of its lost ground.

“I got this wrong,” Meta Platforms CEO Mark Zuckerberg said, while announcing that 11,000 of Meta’s workers — 13 per cent of the total — would be laid off. He had believed the pandemic-induced tilt towards digital technologies was permanent. However, though hiring in hordes may not have been the correct call, it was a business exigency driven by how things looked at the time. And they looked all-too-real.

As the new reality sinks in, it is throwing up newer areas that need attention, and investments. For instance, Microsoft, which is laying off 10,000, says it plans to hire people in strategic, competitive areas, such as artificial intelligence, which, it hopes, will reboot it for the next phase of growth. Indeed, the software giant announced a $10 billion investment in OpenAI, the maker of the chatbot, ChatGPT.

Experts say ChatGPT can provide credible responses to questions and, therefore, presents a threat to search, which is 60 per cent of Google’s business. Naturally, we can expect Google, as it lays off 6 per cent of its workers, to step up its investments in artificial intelligence. Its CEO, Sundar Pichai, signalled this while announcing the layoffs. “We have a substantial opportunity in front of us with AI across our products and are prepared to approach it boldly and responsibly,” he said in a post.

The new battlefronts are opening at a time when the monetary cycle is turning. Central banks, determined to vanquish the monster of inflation, have spelled the end of cheap money. The era of higher interest rates will offer the moneybags attractive alternatives to the razzle and dazzle of new-age technology firms. The so-called funding winter is already a reality in India. A valuation winter could be next.

The buzz in start-up city is that some of the country’s highly valued start-ups are being offered fresh funds at a fourth or fifth of their valuations in previous rounds — even lower in certain cases. It will be far more difficult now for a start-up to acquire another at a high price by raising either investor money or debt.

Amid the turmoil, professionals in India face the third stage in changing attitudes to careers. Time was when people thought they would do the same job (often with the government) all their lives, and they did. In the second stage, with the boom in private sector jobs, professionals were comfortable switching jobs, but only when they wanted to switch to greener pastures. Being laid off was unthinkable. Now, you may have to look for another job — or consider a path away from full-time employment — because your employers do not need you anymore. Or, so they think.

Apple, one of the oldest members of the Big Tech Club, appears to be weathering the storm admirably. That, an article in Business Insider pointed out, may have to do with CEO Tim Cook’s steady leadership. Apple did not go into a hiring frenzy when things looked rosy, and it is not doing sweeping layoffs now that things look anything but. One is tempted to wonder whether part of the reason is that Apple’s mainstay, the iPhone, is far more tangible and, therefore, a more resilient source of revenue than posts and likes on the internet.

But, do remember that decades back Apple staged a famous layoff of just one man. He was one of its two founders. The bosses did not need him anymore. Or, so they thought.