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Journalism of Courage
The spate of tech layoffs continues. However, the rapidly declining number of companies and employees can come as a breather for millions anticipating a pink slip. Based on layoffs.fyi, in April 2024, 50 companies laid off 21,473 employees.
Elon Musk’s Tesla, Turkey’s instant delivery service Getir, and Apple were the top three tech companies to fire the most number of employees. While Tesla slashed as many as 14,000 jobs, Apple sacked close to 600 employees. On the other hand, Getir shut down its operations in the US, the UK, and Europe, impacting over 6,000 jobs.
So far in 2024, as many as 271 companies have sacked 78,572 employees. In January, 122 companies sacked 34,107 staff. In February, 78 companies fired 15,589 employees, and in March, 37 companies laid off 7,403 staff. While March saw a decline in layoffs, April witnessed a significant spike.
Based on a report in The New York Times, the massive job cuts at Tesla came at a time when the company was facing increasing competition and declining sales. The report called the management changes and layoffs at Tesla a reminder of the unpredictability of Elon Musk, the chief executive at the automotive company.
Reportedly, Musk has not outlined a plan to reverse the declining car sales and instead seems to be focussed on ‘long-shot ventures’ like self-driving taxis.
Meanwhile, Getir, which rose quickly, is bearing the brunt of the rapid fall of the quick commerce industry. On April 29, Getir, which was once valued at $12 billion, announced that it would shut down its operations across the US, the UK, and Europe and will focus only on its home turf Turkey.
In April, while Tesla, Getir, and Apple sacked the most employees in the US, UK, and Europe, several tech companies in India also handed over pink slips to hundreds of employees. On April 27, Bengaluru-based healthtech startup Healthify laid off around 150 of its employees, 27 per cent of its workforce. The layoffs were reportedly an outcome of a restructuring exercise and the impacted employees are believed to be members of the sales and product teams.
On April 18, content-to-commerce company Good Glamm Group sacked as many as 150 of its staff. The company said it has placed a new framework to streamline operations which resulted in eliminating certain redundancies over the last year. Similarly, on April 10, upskilling startup Scaler handed over pink slips to around 150 employees. The company cited long-term growth and sustainability as the reason.
On April 6, Bengaluru-based EV charging infra provider Bolt.Earth announced a restructuring exercise impacting somewhere between 70 and 100 employees. This is reportedly the company’s second restructuring exercise in four months. On April 2, popular edtech company Byju’s laid off close to 500 employees, 3 per cent of its total 15,000 workforce as part of a restructuring exercise.
From pandemic hiring-spree to economic downturns, and the induction of AI technologies, the reasons behind the recent ripple of layoffs are wide-ranging.
“Most of the layoffs are witnessed in the tech industry, currently a result of the mass recruitment of employees before the COVID-19 pandemic. The overhiring, paired with the fluctuating recessionary and inflationary periods over the past couple of years, has resulted in abrupt layoffs in the industry,” said Jayanth Murthy, joint managing director, South Asia & Africa, Kaizen Institute.
Murthy also feels that with the advent and rapid expansion of AI, companies are looking to expand their businesses and streamline their operations more efficiently with increased investments shifted towards technological advancements. According to him, this has, in turn, decreased their need for employees, further replacing jobs with AI services.
Elaborating further, Murthy said, “A significant factor contributing to job displacement is the corporate practice of outsourcing, often motivated by cost-reduction tactics since maintaining a full-time workforce can be financially burdensome for many companies. Consequently, companies may opt to relocate work to regions with lower labour costs, allowing organisations to capitalise on financial savings, often resulting in job reductions within the original company’s workforce.”
Indian tech companies too have been witnessing layoffs. A majority of the companies are citing organisational restructuring and shift in priorities, some have been unable to cope with the perils of the economic downturn.
“Historically, Indian IT services have seen layoffs, but the companies have also continued to add jobs at the same time. They have laid off some employees with skills that are in oversupply or where there was reduced demand, but they added jobs in areas where there was demand growth or expansion of market segments. This is what makes the current trend stand out. The fact that the top four IT companies have shown an overall reduction in their number of employees is very unusual and worrying. This time, this dynamic is different than in the past,” said Sabina Dewan, president and executive director of JustJobs network.
Dewan added that the rapid AI adoption is disrupting IT sector jobs, which have long been foundational for companies. Industry leaders struggle to manage AI’s impact, potentially affecting 30 per cent of the jobs. Additionally, inflation-induced investment volatility complicates the sector’s stability.
While the tech layoffs may spell despair for millions, many continue to be optimistic. Some experts feel that this temporary pain will pave the way for better outcomes for the industry in the future. This is also seen as a lesson for many where more companies should now divert their focus on creating impactful products and ensuring sustainable unit economics.
“Companies need to prioritise building products and services that solve problems and make a tangible impact, along with monetising their services. Any business or product that requires an endless amount of marketing/cashback/reward to support top-line growth, without positive unit economics, will lead to high cash burn and hence is unsustainable in most cases. Companies must draw a clear line in this regard,” said Jitin Bhasin, CEO & founder of SaveIN.
Bhasin also pointed out that it is imperative to have clear and transparent conversations with employees to align them towards the long-term goals of a company, and make them understand the rationale behind some of the key decisions including product prioritisation and cost decisions.
On a similar note, Kamil Khan, CTO & director of Sellergize, said, “Layoffs could be reduced with alternatives like temporary pay cuts, spending audits, cash management, and embracing remote work to save on office expenses. And, startups can avoid layoffs by investing in talent development through training programs and apprenticeships. Partnering with educational institutions helps them access skilled workers, fostering mutual growth.”
With the ongoing layoffs, the tech industry is confronted with a new reality. For some, it may just be a temporary blip, many are increasingly growing apprehensive over AI replacing jobs and the sluggish economic climate. However, experts urge companies to shift their focus on creating value through meaningful solutions and sustainable growth, even while advocating for employee welfare to weather the storm.
