Tech layoffs are accelerating, according to the data. The surge in staff cuts comes after reductions in human capital slowed so much in the back half of 2023 that we wrote that “tech layoffs are all but a thing of the past.” At the time, reported layoffs had been trending down for months and months to reach what appeared to be a nadir that was so low it felt inconsequential.
How things have changed. At the time, we posited that rising tech valuations were taking some pressure off technology concerns and that large-scale cuts appeared to be losing luster compared to more targeted reductions in total staffing. Then 2024 rolled around and flipped the script.
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The recent wave of layoffs has hit tech shops big and small. Veho, a package delivery company, cut 65 people this week, or about one-fifth of its total headcount. After quick revenue growth in 2023, midsized tech companies are cutting as well. Brex’s latest layoffs make it plain that even some of the best-known, and most richly funded, upstart tech companies are finding their headcount to be too much. And the majors are cutting as well, with Microsoft axing 1,900 workers yesterday, and Google planning more cuts throughout the year. In the latter case, staggered layoffs are a great way to tell workers to quit, so expect total attrition at the search giant to outstrip forced exits.
The plural of anecdotes is not data, so we need to to look at historical trends to put these layoffs into context. Thankfully, that information is at our fingertips and we can report that, yes, the layoff surge that you are feeling is in fact an actual wave. Let’s dig into how sharply tech companies are ripping humans out of their businesses, and our working hypotheses as to why the cuts are coming with such frequency and depth.
Looking at the data
Tech layoffs bottomed out in September 2023. In that month, Layoffs.FYI counted just 4,707 tech layoffs across 65 total known cuts. Those figures rose throughout the final months of the year, reaching just over 8,000 in November, and 7,000 in December, resulting from 72 and 56 known cuts, respectively.
Then 2024 kicked off. January has thus far seen 23,670 known tech layoffs, sourced from 85 known reductions. Not only are we seeing more companies cutting thus far in January, but the reductions are also larger in scale. More and bigger cuts means one thing: Tech layoffs are once again accelerating — and rapidly.
What’s going on?
The current layoff wave is not single-factorial.
The shift to AI is one of the hypotheses as to why even hugely profitable tech giants are laying off staff. In that scenario, they would simply be redirecting resources in the direction they most believe in. More AI, less creator management, etc. And that means that staff in less favored areas of business could find themselves outside and in the cold.
That tech as a whole is more bullish about AI than pretty much anything else is a story we have already seen play out in venture capital, so we can easily believe it. But when it comes to layoffs, it seems that there’s more at play, and some of these other factors are more worrying.
For all the talk about slowing inflation, and the policies that should ensue, not much has changed on the macro front in recent months. ZIRP days are behind us, that’s for sure, but even the moderate rate cuts that many are hoping to manifest in short order are taking their time. If tech companies are taking their cues from central banks, sticky and high rates are another incentive to rein in their enthusiasm and spending for 2024.
There’s also the question of bloat, with all respect possible as we are talking about people. But having witnessed 2021, we also know that tech companies hired liberally over that period, without always having a clear picture of how they would use that talent. When winter comes, it is no surprise that they realize they could do more with less. That the cuts are still happening at their current level is a surprise, but some trends last longer than you expect.
Arguably, maybe they also grasp that they don’t want to do more. There’s always the risk for tech companies to do too much and not do it well. With intense competition coming up on the AI front, perhaps tech giants and startups are starting to take in that they need to get this right; the sooner, the better.
Other hypotheses occupy our brains. The evolution of major tech companies to MBA-run shops that prioritize near-term financial results over long-term innovation is one. That’s what layoffs at Google’s skunkworks division sound like to our ears, for example.
For tech workers, the landscape is clear: No matter what company you’re at, no matter what industry it targets, your role is not safe. Keep that résumé up-to-date, lest you find yourself unprepared and unemployed at the same time.
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