Deciphering the drivers behind tech layoffs

  • The layoffs at tech companies continue: Tesla, Amazon, Microsoft, Meta, Apple, Cisco, SAP, and Sony have all made significant cuts.
  • More than 270 tech companies in the tech sector have laid off more than 70,000 in the first quarter of 2024, according to the layoffs tracker.
  • Layoffs reflect a broader trend in the tech job market, where companies increasingly lean on AI and automation for efficiency and innovation, often resulting in a reduced human workforce.

The global tech industry is experiencing a significant surge in layoffs, impacting organisations like Amazon, Google, and Meta, alongside various startups. As the world grappled with the aftermath of the COVID-19 pandemic and geopolitical tensions escalated, the tech sector faced unprecedented challenges, leading to mass layoffs.

Increasing trend of tech layoffs

In 2023, more than 240,000 roles left the tech industry globally, as many tech giants have shaved their workforce throughout the year. So far, there have been more than 80,000 tech layoffs in 2024.

In April, Amazon disclosed its ongoing plans to shed hundreds of roles within its cloud division, while Dell Technologies revealed that 6,000 employees — approximately 5% of its workforce — would be made redundant.

Microsoft, Google, eBay, and Tesla are all reducing their staff numbers, with Tesla intending to dismiss 6,000 employees in Texas and California.

In March, IBM unveiled significant job cuts in its marketing and communications division. CEO Arvind Krishna suggested that AI and automation could supplant up to 30% of back-office roles within five years.

Also read: Dell layoffs hit 13,000 in 2023, double the number claimed

Grammarly downsized its staff by 230 to focus on transitioning towards AI-enabled workplace solutions. Apple ceased its autonomous car division, affecting up to 1,400 employees, as it terminated the electric car project and redirected its attention to other technological innovations.

In February, Electronic Arts (EA) announced a 5% reduction in its workforce, cutting 670 jobs, and Sony’s PlayStation unit disclosed plans to lay off 900 employees, constituting 8% of the division’s workforce. Travel company Expedia declared it would cut 1,500 roles in its Product & Technology division by 2024. Meta CEO Mark Zuckerberg arguably triggered job cuts in 2024 after declaring that 2023 was the “year of efficiency,” only to witness the stock soar almost 200% alongside 20,000 job cuts.

In a bold move towards AI-centric growth, SAP, buoyed by robust earnings, unveiled a significant restructuring initiative to reshape its workforce dynamics. The initiative will impact 8,000 roles through reskilling or departures.

Also read: Sony SIE announced global layoffs of 8% of its total workforce

What is causing tech layoffs?

Inflation: With a sudden rise in inflation in June 2022, prices increased, making it more expensive for people and businesses. To cope with the extra costs, businesses often choose to cut their expenses, and one of the significant expenses for many companies is paying their employees. When businesses reduce their spending, tech companies that rely on selling advertisements, such as Meta, Google, Instagram, Snap, and ByteDance, also felt the impact because these businesses cut back on their advertising spending, which, in turn, affects the revenue of tech companies.

Over-hiring during the pandemic

The recent increase in redundancies is partly due to a correction in hiring too many employees. When the pandemic was at its peak, technology use surged as people turned to remote work, online shopping, and various online activities. This led to tech companies hiring aggressively to meet the demand, thinking this trend would continue. For example, Meta nearly doubled its workforce from 48,268 in March 2020 to over 80,000 by September 2022. However, as things returned to a more normal state with hybrid work arrangements and people spent less time online, the demand for tech services decreased, leading to a reduced need for new hires made during the pandemic.

Rise of AI automation

As technology companies downsize their workforce, the need for human resource personnel also decreases, resulting in significant redundancies in the recruitment sector. Additionally, automation has played a significant role in this trend. Although AI has not completely replaced jobs, it has disrupted certain areas. According to the World Economic Forum’s The Future of Jobs Report 2020, AI is predicted to replace approximately 85 million jobs.

Also read: Reasons behind mass layoffs at tech companies

Consequences of tech layoffs

Financial impacts

Losing a job can have devastating financial consequences for employees, jeopardising their ability to meet basic needs and maintain financial stability. The financial stress resulting from layoffs can exacerbate existing economic inequalities and contribute to broader socio-economic challenges.

Emotional impacts

Job loss can take a significant toll on individuals’ emotional well-being, leading to feelings of anxiety, depression, and uncertainty about the future. It is essential for employers to provide adequate support and resources to help laid-off employees cope with the emotional toll of job loss.

Talent depletion

The loss of skilled employees due to layoffs can deplete a company’s talent pool, depriving it of valuable expertise and knowledge. This talent drain can hinder innovation and impede companies’ ability to adapt to changing market dynamics.

Innovation slowdown

Layoffs can stifle innovation within the tech industry by reducing the pool of talent available for research, development, and collaboration. This innovation slowdown can undermine companies’ ability to stay competitive and drive technological advancements.

Competitive decline

The cumulative impact of layoffs across the tech industry can weaken companies’ competitive positions and undermine the industry’s overall dynamism. A decline in innovation and talent retention can hinder companies’ ability to differentiate themselves and maintain market leadership.


Lydia Luo

Lydia Luo, an intern reporter at BTW media dedicated in IT infrastructure. She graduated from Shanghai University of International Business and Economics. Send tips to

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