The tech sector has kicked off 2024 with another round of job reductions, further scaling back following widespread layoffs in the preceding year. According to Layoffs.fyi, a startup monitoring industry job cuts since the onset of the pandemic, approximately 32,000 tech professionals have been displaced so far this year.
Founder of Layoffs.fyi, Roger Lee, explained that tech firms are still adjusting their workforce sizes in response to over-hiring during the pandemic surge, exacerbated by prolonged economic challenges and a downturn in the tech sector. Lee identified two primary waves of job cuts: the initial spike coinciding with the early stages of the Covid-19 pandemic, and a subsequent trend beginning in the second quarter of 2022, influenced by rising interest rates.
While this year’s layoffs are characterised as more targeted and smaller in scale compared to those of the previous year, economic factors remain the driving force behind these decisions. Additionally, companies are redirecting resources toward artificial intelligence (AI) initiatives, reflecting a broader industry trend. An analysis by CompTIA revealed a notable increase in job postings requiring AI skills, signalling a shift in hiring priorities.
Despite the downsizing, the tech sector is simultaneously experiencing heightened recruitment activity in certain areas. CompTIA reported a substantial month-over-month increase in active job postings in January, indicating ongoing demand for talent within the industry.
Bert Bean, CEO of Insight Global, a staffing company, expressed optimism about the industry’s potential for recovery but highlighted lingering uncertainties. He anticipates a period of continued market volatility until the Federal Reserve takes decisive action to adjust interest rates.
Recent announcements from companies like Snap Inc. and Okta Inc. underscore the persistence of workforce reductions in the tech industry. Snap Inc. disclosed plans to cut approximately 10 per cent of its workforce, while Okta Inc. announced a 7 per cent reduction, echoing cost-saving measures implemented by other prominent tech entities including Amazon.com Inc., Salesforce Inc., and Meta Platforms Inc.