More than half of UK tech workers are preparing for layoffs as the global tech sector continues to create doubts over job security, research has found. A survey of 2,000 UK-based tech workers conducted by CWJobs found that 53% were pre-emptively applying for new jobs over fears of redundancies at their companies. The total number of tech layoffs in 2023 has reached 57k in just 25 days into the year, following the ~159k layoffs in 2022, according to Layoffs.fyi.
The obvious reason behind all these layoffs is inflation and the incoming threat of recession and the majority of tech companies are also seeing their fortunes reverse and their dreams dim. They are shedding employees, cutting back, and watching their financial valuations shrivel — even as the larger economy chugs along with a low unemployment rate and a 3.2 percent annualized growth rate in the third quarter.
For over a decade, investors desperate for returns sent their money to Silicon Valley, which pumped it into a wide range of start-ups that might not have received a nod in less heady times. Extreme valuations made it easy to issue stock or take on loans to expand aggressively or to offer sweet deals to potential customers that quickly boosted market share.
the tech sector hiring freeze impacts current workforces and soon-to-be graduates aiming for a Silicon Valley opportunity. Late last year, Meta CEO Mark Zuckerberg announced mass layoffs at Facebook’s parent company Meta, with 13% of the global workforce being shown the door.
Twitter’s CEO, Elon Musk, followed suit by offloading roughly 50% of the staff at the social media giant. With about 4,000 employees losing their jobs at Twitter, with some being asked back not even a day later, it is clear that confusion rules Northern California tech stalwarts. The trend continued in 2023, with Amazon reportedly relieving nearly 18,000 employees.
As Spotify reduces its workforce by 6% globally, concern centers on finding an endpoint to the carnage. Daniel Ek, Spotify’s CEO, publicly communicated the market assumptions that steered the Swedish tech giant askew.
“In hindsight, I was too ambitious in investing ahead of our revenue growth,”
London has the worst possibility of the where the number rose to 63%. Age also appeared to be a key factor, as 62% of tech workers in the 18-24 age range were preparing for layoffs with job applications, compared to just 24% of workers over the age of 55.
“Tech workers are showing signs of uncertainty around job security – likely triggered by what they are reading in the news and on social media,” said Dominic Harvey, director at CWJobs.
“Employers need to go the extra mile to reassure them and build a strong sense of security in their current role and long-term career prospects. This could be key to attracting and retaining much-needed talent over the coming months and years.”
Tech giants Amazon, Meta, Microsoft, and Google have cut tens of thousands of jobs between them. Startups are also feeling the strain, with Paddle and Beamery among those reducing headcount this month.
“The jobs market remains highly competitive – so if employees or candidates are made to feel insecure or uncertain at any stage, from the job advert through to employment, they will find plenty of opportunities elsewhere,” Harvey added.
Mark Zuckerberg recently came out to take responsibility for the layoffs. He admitted that the rapid hiring had been ill-advised. They had made so many hires in anticipation that the frenzied online activity and ad-spend of the mid-Covid era would be sustained after the pandemic, but there was no evidence to suggest that this would be the case.
When companies treat hires as stop gaps, there is bound to be a negative impact on long-term productivity. Yet, when they consider how their hiring decisions today will affect the hires in a few years, they will make more conscientious decisions.