Expert Opinions: Why Are So Many Big Tech Companies Suddenly Laying Off Employees?

In 2024, the tech industry faced large-scale job cuts, continuing a trend from recent years. Over 140,000 roles were eliminated, with major reductions from companies like Dropbox, Upwork, Meta, Samsung, and TikTok. October alone saw around 3,000 layoffs, though this month had fewer cuts compared to earlier in the year.

Dropbox announced a 20% workforce reduction, affecting over 500 employees. CEO Drew Houston stated this decision came as the company moved towards a leaner, more efficient setup. Many tech firms are following similar steps to adjust their operations for current economic conditions.

How Are Smaller Tech Companies Being Affected?

These layoffs have also hit smaller tech companies, which face similar financial pressures but often with fewer resources. Upwork, a freelancing platform, recently cut 21% of its workforce to save about $60 million annually.

Some startups have had to take even tougher steps. CapWay, a fintech startup, shut down entirely, leaving all employees without jobs. The company could not sustain itself in the current market, despite previous attempts to keep going.

Are Certain Regions More Affected By These Layoffs?

Layoffs have spread globally, but some areas have felt more impact. TikTok, for example, recently let go of hundreds of employees, mostly in Malaysia, as it transitions to using AI for content moderation. This move points to a trend in the industry, where more roles are increasingly automated.

Samsung also announced a 10% reduction in staff across Southeast Asia and Australia, though the exact figures remain undisclosed. These cuts indicate that layoffs are occurring across many regions as tech firms adjust to both local and global pressures.

In the United States, tech hubs like the San Francisco Bay Area and New York have seen substantial job cuts. Employees in multiple regions feel the effects as companies reshape their teams.

Are These Layoffs Part Of Larger Restructuring Plans?

In many cases, these layoffs are connected to more extensive restructuring plans focused on other business areas. Meta, for example, has reduced its workforce across different teams, including those working on Threads and recruitment, to put more resources toward specific projects.

ConsenSys, a blockchain technology company, recently announced it would cut 20% of its staff due to struggles within the crypto market. The company has changed its focus toward more important areas of operation. ConsenSys is one of many firms in the crypto industry facing similar pressures, with many in this field adjusting to financial conditions that affect their structure and resources.

Has The Frequency Of Layoffs Changed Over Time?

The pace of layoffs in the tech industry has started to slow. October recorded one of the lowest monthly figures for job cuts this year, suggesting a slight reduction in the scale of cuts. January, February, and April saw peaks, but numbers have levelled off as companies take a steadier approach to staffing adjustments.

Data from Layoffs.fyi indicates that in September, around 3,941 jobs were cut, with October seeing a lower figure of 3,080. This steadying trend could mean that companies are recalibrating without drastic cuts, possibly hinting at a more stable workforce ahead.

While some layoffs continue, this change in numbers could mean the tech industry may be finding a steadier footing. Companies seem to be managing staffing needs more precisely, taking away the need for the large-scale cuts seen earlier in the year.

Are Specific Jobs More Affected Than Others?

Within tech companies, some roles have been impacted more than others. Layoffs this year have hit certain sectors of the tech industry especially hard. Roles in software development, hardware engineering, and social media have seen high numbers of cuts, as companies look to cut down on expenses. Fintech and AI firms have also cut jobs, with many wanting to focus to automation and cost management.

Dropbox, for example, made reductions in areas it considered overstaffed, with the intention of creating a more focused workforce. Product management and marketing roles have been particularly affected, as companies rethink which functions best support their goals.

Tidal also cut roles in product management and marketing, placing more focus on engineering and design teams. With automation becoming more prevalent, roles like content moderation and design face more frequent cuts, as companies place their resources in core technical functions.

Tech firms appear to be concentrating their workforce in essential areas, especially in engineering and development. This trend may continue as companies seek to keep teams closely aligned with goals and manage the changing demands in their fields.

What Do Experts Think?

While layoffs disrupt teams, some companies see these steps as a way to remain prepared in an unpredictable market. Some experts disagree with this, though. This is what they think…

Our Experts:

• Kaveh Vahdat, Founder and President, RiseOpp
• Yakov Filippenko, Founder and CEO, Intch
• Stephanie Alston, President, BGG Enterprises
• Cynthia Patterson, Founder, PeopleOps.how
• Oliver Shaw, CEO, Orgvue
• Louis Dussart, VP, Europe, RTP Global

Kaveh Vahdat, Founder and President, RiseOpp

“The recent surge in layoffs among major tech companies can be attributed to several key factors:

“Post-Pandemic Market Correction: During the COVID-19 pandemic, tech firms experienced unprecedented growth, leading to aggressive hiring to meet soaring demand. As the market stabilizes, companies are recalibrating their workforce to align with current economic realities.

“Economic Uncertainty: Global economic challenges, including inflation and geopolitical tensions, have prompted companies to adopt more conservative financial strategies, resulting in workforce reductions.

“Strategic Shifts Toward AI: The rapid advancement of artificial intelligence has led companies to reallocate resources, often at the expense of traditional roles. For instance, Microsoft and Google have announced significant investments in AI, accompanied by layoffs in other departments.

“Impact on the Tech Industry Post-Layoffs:

“Talent Redistribution: Laid-off professionals are transitioning to emerging sectors such as AI, cybersecurity, and renewable energy, fostering innovation across industries.

“Increased Freelancing and Entrepreneurship: The rise in layoffs has spurred a shift towards freelancing and startup ventures, diversifying the tech ecosystem.”
 

Yakov Filippenko, Founder and CEO, Intch

“Layoffs within companies are always a painful process, affecting both departing employees and those who remain, and they significantly damage the company’s employer brand.

“What we’re seeing now is a prolonged effect of COVID and the global economic crisis:

“During the pandemic, demand for digital services surged organically, leading to growth in their valuations (often supported by “helicopter money” investments) and the need for additional staff. With the pandemic over, these valuations have dropped, and there’s no longer an overwhelming workload.

“Another reason is that, in times of economic uncertainty, big tech and startups are focusing on profitability. Payroll is typically one of the largest expenses in tech companies, so cutting it down becomes a relatively inexpensive way to show higher returns to shareholders.

“Finally, waves of layoffs are a tried-and-true method for internal optimization, allowing companies to offload unprofitable departments and underperforming employees.

“Together, these are the three main drivers of layoffs. Automation and AI advancements are also boosting team productivity. However, the pattern is clear: before and during the pandemic, demand for employees was so high that companies expanded internal hiring, often reallocating talent across departments. Now, this “freed-up” workforce is being let go, underscoring that the first three factors are the true priorities.”

Stephanie Alston, President, BGG Enterprises

“I’ve been reflecting on the recent wave of layoffs across big tech companies, and it’s a challenging moment for the industry. Several factors are at play here, but it’s clear the economy, coupled with the election cycle, is shaping this moment in significant ways. As companies face increased economic pressures, including inflation and interest rate hikes, many are finding it necessary to reassess their workforce to stay financially agile. We’re also seeing the effects of a “post-pandemic correction,” where tech companies that ramped up hiring during COVID-19 are now recalibrating for slower growth.

“What happens to the tech industry after these layoffs? In the short term, these job losses create instability, but in the long run, they may lead to a reimagining of roles and skill demands within the industry. Layoffs often bring opportunities for reshaping teams with an eye toward sustainable growth and innovation. For professionals in the tech field, this could mean focusing more on emerging skills or pivoting into sectors less affected by economic swings, like healthcare or environmental tech.

“The political landscape plays a crucial role, too, as policies that emerge from this election cycle could either cushion the industry or add new challenges, particularly with topics like antitrust regulations or immigration policies that impact the tech workforce. This time also calls for more robust support systems for those impacted by layoffs and a focus on creating more resilient business models in tech, which has historically been heavily influenced by shifts in economic policies and consumer demands.”

Cynthia Patterson, Founder, PeopleOps.how

“With my background in Talent Acquisition, HR, and Finance, I look at business through both the people and numbers perspectives, and how these two directly affect each other. This gives me a unique viewpoint, especially in understanding the shifts in the labor market that we’re seeing right now.Layoffs haven’t come out of nowhere—they’ve sadly become part of the accepted norm.

“In big tech, layoffs are usually the result of pressure from stakeholders who are focused on increasing profit margins, while keeping the speed of smaller, more nimble organizations. We live/operate in a system where constant revenue growth and increasing profitability are the expectation, forcing large tech companies into a continuous cycle of cost-cutting and efficiency drives, where people (labor) often become the expendable variable.

“Unsustainable valuations have been a significant issue for both small and established companies. Smaller companies often pursue high valuations to attract investors, which can lead to overhiring based on unrealistic growth targets. When these targets aren’t met, layoffs become inevitable. For large tech companies, high valuations often mean pressure to show rapid growth and profitability to justify those valuations. This leads to aggressive expansion and hiring, and when growth doesn’t meet expectations, the result is often widespread layoffs—both in small and large tech companies.

“Our economic slowdown is a driving pressure. Despite inflation having eased, costs remain high—from rent to interest rates to everyday necessities—with companies actively contributing to these costs by grossly marking up their services and passing those increased costs onto consumers.

“Efforts were made to stop price gouging, but legislation failed to pass in Congress, leaving consumers to bear the burden of these marked-up prices. As a result, companies are forced to pull back, taking a hard look at operational costs, especially labor costs—ironically, after contributing to their own challenges through aggressive price increases and unsustainable growth targets.

“To say it simply: Efficiency and profitability come at a cost for the workforce.”

Oliver Shaw, CEO, Orgvue

“The big tech layoffs such as those by Meta and TikTok point towards a broader trend of shifting dynamics that are sweeping the industry as these companies continue on the path to AI deployment. AI is automating workloads and enhancing workflows, leading the charge in reshaping roles across sectors.

“But while it fuels innovation, automation brings reduced demand for certain skillsets, meaning workforces need to be restructured. This affects front-line workers and higher-skilled roles alike, forcing organisations to assess their existing workforce structure and consider where workforces can be retrained.

“However, AI is not the villain here. This is not an all-or-nothing situation; the jobs that AI replaces entirely will be in the minority. While the immediate pain of job displacement is real and should not be understated, history teaches us that such transitions are often followed by an expansion in employment, not a contraction. It would be better for organisations to see AI as a workforce enabler, working in collaboration with and, more importantly, needing the support of people to produce efficiency gains and cost savings.

“Leaders need to be strategic and measured in their approach, since layoffs often see short-term gains followed by long-term losses. Our analysis of a recent Bloomberg study shows that the true cost of layoffs puts organisations at a loss, where for every $1 saved, businesses spend $1.27 in severance costs, replacement of additional leavers, and a reduction in productivity.”

Louis Dussart, VP, Europe, RTP Global

“We are entering into a moment when growth at all costs – the mantra of the 2021 period – is over. In the recessionary conditions of 2022 and 2023, we saw private tech companies respond by obtaining additional capital, through “extension rounds”, to avoid dreaded down rounds while maintaining cash positions. However, these capital extensions, which typically secured funding for a 12 to 18-month period, are getting closer to amends. The result is that companies need to accelerate plans to increase their cash efficiency.

“The increase in broad tech layoffs therefore looks like an indicator of the current funding landscape. When cash is unconstrained, it’s easy for early-stage companies to secure finance for risk-taking, discovery and new projects with corresponding new hires. But when the conditions are inversed, companies need to be more wary about their finances and focus on core projects.

“Layoffs aren’t the only solution at the disposal of tech companies. They are also simply trying to do more with less, particularly through embedding AI into more workflows. Managers are looking to leverage all the tools out there to maximise sales and marketing efficiency, for example, without new hires.

“It’s important to state that the tech industry isn’t experiencing a total hiring freeze. Great talent is always vital and it’s incomparable to any automated alternative. Where talent is being let go from big tech incumbents, specifically, history tells us that some of these skilled workers will quickly find new homes at startups and smaller tech firms – which is a dynamic driver of tech innovation and progress in of itself.”