Tech Firms Cut 34,000 Jobs as Technology Investments Increase
Tech companies have cut a total of 34,000 jobs so far this year, according to Layoffs.fyi, which tracks unemployment in the tech sector. Among the 141 companies that have laid off staff are big names like PayPal, eBay, Microsoft, and Snap.
The decision to reduce staff comes as tech firms reevaluate their workforce and aim to become more efficient. Jefferies analyst Brent Thill explains that companies want to get rid of “dead wood” and create leaner organizations that can achieve more. Thill also warns that layoffs are likely to continue and potentially worsen, as the trend becomes contagious.
Tech companies are carefully assessing their divisions and prioritizing investments, resulting in job cuts in non-core areas. Amazon-owned video streaming platform Twitch is one example of a company that has eliminated hundreds of jobs this year. However, experts note that job cuts have been accompanied by active hiring, as companies prepare for the future.
Tech sector job cuts are not the only ones happening this year. Companies such as UPS and BlackRock have also experienced significant layoffs, with artificial intelligence (AI) playing a part in these decisions. However, many companies are reluctant to explicitly link technology with job cuts and instead focus on the positive aspects of AI implementation.
According to outplacement firm Challenger, Gray & Christmas, U.S. companies have announced over 4,600 job cuts since May, either to free up resources for hiring individuals with AI expertise or because AI technology has replaced certain tasks. However, this estimate is believed to be an undercount, as companies often prefer to keep layoffs under the radar to avoid negative media attention.
It remains challenging to accurately determine the true impact of AI on job cuts. Nevertheless, tech firms and other industries are making strategic changes to their workforces as they anticipate future trends and prioritize investments in technology.
Analyst comment
Neutral news: Tech firms cutting 34,000 jobs as technology investments increase.
As an analyst, the market will likely experience short-term volatility as job cuts continue and potentially worsen due to the contagious trend. However, tech companies are strategically reevaluating their workforces and prioritizing investments in technology, which could lead to long-term efficiency and growth.
