In tech, 2024 started the way 2023 did — with a wave of layoffs — even though the U.S. economy is booming and the industry is thriving.
Layoffs can be devastating if you're involved, but in the roiling world of tech, regular job cuts are also part of the landscape.
- In tech, company leaders see layoffs as a way to stay efficient, shift priorities and weed out underperformers — while many employees, particularly those with technical skills, assume that finding a new job won't be that hard, and often they're right.
- In many cases, the same companies that are laying people off are also still hiring.
- Tech giants like Microsoft and Amazon, which recently cut jobs in gaming and streaming respectively, are simultaneously planning huge investments in AI.
Microsoft announced this past week that it would cut 1,900 workers from its gaming division.
- Microsoft recently closed its acquisition of Activision Blizzard, which is where most of the cuts — representing about 8% of the company's total gaming workforce of 22,000 — are landing.
- Google also announced a smaller round of layoffs earlier this month and said some cuts would continue to be made throughout the year.
- Google and Microsoft's stocks both hit record highs this week.
Dozens of other companies have announced modest layoffs this month, but not on the scale of Big Tech's cuts at the start of 2023, which in some cases ran to 10,000 or more jobs.
- Those cuts followed what many companies now say was a binge of over-hiring at the start of the coronavirus pandemic in 2020.
The tech industry has always had its own boom-bust cycle, often tracking the ebb and flow of tech adoption cycles like the advent of the personal computer, the internet, and the smartphone.
- Today's tech giants know that the smartphone era has matured, and that other recent trends — like cryptocurrency/web3 and the metaverse — haven't taken off, but they are gearing up for a vast wave of growth around AI.
These layoffs are strategic moves rather than "spend less or die" cuts.
- That makes them fundamentally different from the kinds of layoffs we are now seeing in the media industry, which — unlike tech — is shrinking fast as part of a long-term decline.
Tech stocks are testing all-time highs and the unemployment rate remains historically low. If tech is laying people off, you should feel for those affected — but don't shed a tear for the industry.