Tech companies get lean and mean on the downturn
As the global economy slows down, jobs are evaporating. But the daily march of firings coming from technology and app-based services is truly disturbing. A few days ago, online food delivery platform Swiggy said it was laying off 380 employees due to over-hiring and ‘poor judgment’. Over the last few months, fund-starved startups in India have sacked over 18,000 personnel. A study showed that 44% of the total layoffs among these companies were from edtech firms like Unacademy and Byjus, who had prospered during the Covid months. Some firings are a trickle-down effect of international technology majors like Meta, Google and Amazon.
Google chief Sundar Pichai said the drastic job cuts were to adjust to what he called the new ‘economic reality’. It is a euphemism companies use for downsizing to synchronize with the slowdown and to a possible recession when business orders will fall. These companies rode the Covid wave when technology-based businesses grew at a spanking pace and recruited aggressively to match their needs. As the global economy applied the brakes last year, and in the first month of 2023, tech companies, including Amazon, Twitter, Google, Microsoft, and many more, shed over 200,000 employees.
Tech companies, who expanded the fastest during the pandemic, are the hardest hit today as they carry the most baggage. Data from layoffs.fyi and other crowdsourced job sites show that 2022 was probably the worst year for tech companies, but they predict the worst is yet to come in the first half of calendar 2023. The startup revolution, which saw thousands of new ideas hit the market, began declining before Covid-19 broke out in March 2020. Curiously, while the traditional brick-and-mortar economy sank in India and elsewhere, technology firms, including edtech startups, online delivery platforms, etc., bloomed to cater to an entire population stuck at home. With some normalcy returning, many of these forays find they had overplayed their hand with other peoples’ money and have now been benched. The takeaway is: Business cannot be built with a six-month vision. Investment plans must be more long-term, perhaps five years at the very least. There can be no laws to restrict hiring, nor can you stop companies from shedding surplus workers. Current fluid conditions demand tech workers don’t get carried away and to weigh their options carefully to prevent getting singed on the downturn.