In this article, we tell you everything you need to know about the 2022 tech industry layoffs. We cover what companies are laying off workers, why it's happening, and what it means for your career.
The tech industry is in for a rough ride. This year alone tech companies already let some 35.000 employees go – with more massive layoffs in the coming months, according to industry analysts. With big players like Twitter, Klarna, Coinbase and Netflix cutting back, the whole industry struggles to stay afloat. So, what's causing these mass layoffs? What does it mean for the future of the industry and what can employees do? Keep reading to find out.
Not only is the tech industry hit hard by layoffs. Many companies have even pulled job offers that were made before. But there is not just one cause for this situation. As American journalist H. L. Mencken once put it: “For every complex problem, there is an answer that is clear, simple and wrong”.
So, let’s dig a little bit deeper. Around 2009, the latest economic boom began, which lasted about ten years until covid-19 came around and changed the game. Often in favour of tech companies – at first.
Because as harsh as it may sound: some tech companies were able to make great use of the pandemic. Such as the streaming platform Netflix (facing around 175 layoffs lately) or on-demand grocery delivery Gorillas, who just recently let go around 300 employees. And it was only logical. People streamed more and ordered groceries instead of going to the supermarket in person. Others, like cryptocurrency exchange platform Coinbase (with an estimated layoff of 1.100 employees), grew fast around Bitcoin and Ethereum. And all of this really went well for some time. Many tech companies invested in crypto, while seemingly ignoring the fact that these currencies always have a massive downside, which is the huge volatility. As soon as crypto drops, crypto-related companies drop as well – which is exactly what happened.
But why did it happen? One of the most important reasons are the many geopolitical crises – including Russia’s war in Ukraine of course, which led to a spiralling inflation as well as a succession of Fed rate hikes about three-quarters of a percentage point. The most aggressive hike since the year 1994 was intended to curb inflation, which already shakes Wall Street with the Dow Jones falling 700 points and the Nasdaq composite index, (tech-heavy stock index) losing about 30 per cent of its value since the beginning of 2022.
All of these reasons make tech companies very, very nervous about the future and seem to lead them to try and cut costs by reducing their workforce.
And it’s not only established tech companies who struggle, but the whole industry from seed stage start-ups to scale-ups and grown-ups, they’re all there. Many companies that were really promising in the beginning are hopelessly losing ground now, according to layoffs.fyi, which tracks the significant layoffs in the tech industry.
As layoff.fyi’s data shows, many start-ups have even had to let all their employees go and are now in voluntary administration, such as the initially promising delivery company called 'Send' from Australia. 300 employees had to leave the company - and a whole 46,000 registered users no longer get food delivered in Melbourne and Sidney. What will happen to the company, which was able to raise 3.1 million dollars in 2021, is still unclear.
The Israeli delivery start-up 'Avo' is in a similar situation. 500 employees have been laid off, which makes up about three quarters of the company’s workforce. According to several reports, ‘Avo’ had tried to raise 70 - 100 million dollars but failed due to the difficult markets.
The same applies to social commerce start-up 'Trell', where 300 employees have been laid off – almost 50 percent of the work force.
Another reason for the latest layoffs: Many tech companies rely heavily on debt to finance their operations of course, and higher interest rates simply make it more difficult for them to service their debt. As a result, they lay off workers to stay afloat. And these exact layoffs are extremely difficult and even life threatening for many employees who lose their jobs. But for tech companies they’re actually a necessary evil.
The experts' opinions vary a bit, of course (as is usual in a crisis). However, it crystallises that many recruiters and economists don’t see the layoffs as cross-sectoral per se.
“Layoffs appear to be specific to businesses that are in a more fragile financial situations, like if they are unprofitable and funding dried up, or if they just don’t have the runway to continue to operate without additional funding,” senior economist at Glassdoor, Daniel Zhao, told CNBC.
According to Zhao, some companies are “reading economic tea leaves and pulling back in uncertainty” as opposed to necessity. Zhao: “We have seen a modest pull-back in demand for tech workers but the level is still way above where it was before the pandemic and companies are still desperate”.
Other experts confirm this and say that the layoffs tend to be isolated. Megan Slabinski, district president human resources at consultant Robert Half, for example, said in an article: “You can’t say there’s broad tech layoffs because it’s so isolated. I don’t see the demand for tech-related positions being impacted in the foreseeable future.” Slabinski says that many companies are currently contacting her to ask if the chances of finding talent are better now, but she constantly denies this – because the demand is still huge. Many companies are currently laying off employees - but at the same time, these same companies are also hiring, which means that potential employees are still receiving many enquiries and offers.
Before you get in touch with a new company, you should consider a few points. Therefore, we have compiled the most important aspects for you so that you are well prepared for your next application process.
Make up your mind about your skills and what you want to improve. Out of all the different skills that you can have, choose exactly, what you want to learn more about. And then try to find a company that lets you develop these skills and start learning! You can take online courses for example, or use free tutorials on coding languages – or just start building websites from scratch with no experience whatsoever! Just start! And as soon as you have the job: Try to take a look into other areas, too! Many companies really like that! And by the way: It’s totally fine if you don’t find THE perfect job straight ahead. Just keep going.
Of course, it is still particularly important to match your application to the job. But on the other hand, the application should also be a tad exciting. You can spice up your application with the following aspects: What projects have you already implemented? What are you passionate about? What do you really want to achieve? You can put all that in your application. But remember: don’t make it too long.
It's not only in normal life that it's good to be yourself – it's also in professional life. Especially in disruptive tech start-ups. Disruptive start-ups are not disruptive because they do everything exactly the same way as all the other companies. But because they do things differently. With new approaches. And that includes the fact that many young companies have a strong focus on their people. So why not show them who you really are? It can be so rewarding.
Explore the many different ways to find a job. This can include making use of your networks, using LinkedIn for business or personal networking purposes. Also, you can and should peek into social media platforms like Facebook, Instagram or even Tiktok. Just be creative, nothing is written in stone. Online job boards, job events and corporate career websites can be very helpful as well. Keep your eyes open!
A mentor can provide invaluable support and guidance as you navigate the job market. They can help you identify your strengths and weaknesses, and offer advice on how to improve your prospects. They can also introduce you to new contacts and networking opportunities. In addition, mentors can provide an objective perspective on the job search process, helping you to avoid making common mistakes. Ultimately, a mentor can be a powerful tool in your quest to find the best job for yourself.
If you find yourself frequently changing jobs or struggling to find work in your chosen field, it may be time to consider changing industries. While it can be daunting to make such a major career shift, there are many reasons why it may be the right decision for you. First, you will gain new skills and knowledge that can make you more employable. Second, you may find that the change provides a much-needed breath of fresh air, helping you to feel more motivated and engaged in your work. It can be so fulfilling and challenging. So, if you're feeling stuck in your career, don't be afraid to explore new avenues – you may just find the perfect new fit.
As harsh as it may sound, for many companies the layoffs are just a kind of re-evaluation because still the tech market continues to become more and more important. Of course, many companies have miscalculated. But nevertheless, the current situation also serves as a kind of wake-up call that leads many companies to realign goals.
The pandemic was a factor that came as absolutely unforeseen. The logical consequence is that the market has to reassess itself, especially when the global economy is suffering massively. But that doesn't mean that tech employees have to worry that they won't find jobs anymore, because that's not the case. The wheel will continue to turn in any case, because the tech industry is such an extremely important industry of the future that simply cannot function without employees.
What goes hand in hand with the current situation is that unstable companies have to let go of valuable employees. But this also means that it is now the turn of other companies that are watching the market very closely and will use the opportunity to gain new valuable employees. So it doesn't hurt to take a close look at a potential employer and its benefits. How long has the company been on the market? At what point is the company currently? What do I want myself? What does the company offer me? Once these questions have been answered, just get into the job. Because don't forget: the industry still needs you.
Want more help? We’re here for you. Just become a part of our growing family at 50inTech and make a change with us. For more women workers in tech. As it should be.
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