Are we about done with the tech lay offs?

We are done with the layoffs. More to come in the next few months, say analysts. We’ve all seen the news around Meta laying off 11,000 employees, Twitter’s whirlwind cuts and Salesforce major layoffs impacting over 2,500 people. Clearly the industry has been going through a tough time, but is the end anywhere near?

Unlikely, says Forrester VP, principal analyst J.P. Gownder. It's a good bet that tech companies that haven't yet laid off employees are carefully considering whether or not to do so.

“It wouldn't be surprising to see more layoffs in the next few months, particularly among firms whose fiscal year ends on December 31,” said Gownder. Companies are now setting up finances for success in 2023. Widespread economic concerns, some prompted by rising interest rates, others by the war in Ukraine, high fuel costs, and supply chain issues, are prompting these moves in anticipation of lower demand.

Gownder added that while the overall job numbers remain strong and there are many talent constraints in the economy. Many of the laid-off tech workers have skills that will be valuable in other sectors as today many industries see themselves as "technology firms" that rely on software developers, engineers, and IT talent. But layoffs from departments like recruiting are now less demand, and these workers might have a harder time finding new positions.

“Top tech talent, who lose their jobs, will find other positions, most likely. People with high skills are still in demand and difficult to hire,” he said, adding “other layoffs in tech companies come from jobs (like recruiting) that are in less demand”. As such, these workers might have a harder time finding new positions.

“We should always remember the human costs of layoffs. These employees have their lives disrupted and their personal finances put at risk. So there's always a tragic element to any discussion of layoffs, and we should remember that real people are affected.”

Earlier this week enterprise software company Salesforce was reportedly looking to lay of thousands of employees off in a round of cuts due to "performance" issues. A statement issued to CNBC by Salesforce confirmed the news saying that sales performance is what drives accountability. “Unfortunately, that can lead to some leaving the business, and we support them through their transition,” it added.

Meanwhile, Meta CEO Mark Zuckerberg said in a letter to employees that it is also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending its hiring freeze through the first quarter of next year.

While it is making reductions in every organisation across both Family of Apps and Reality Labs, recruiting will be "disproportionately affected" since it is planning to hiring fewer individuals next year. Meta is also restructuring its business teams more substantially. Meta's spokesperson declined to comment on what this means for the teams in Asia Pacific. Impacted employees will receive an email soon informing them of what this layoff means to them.

According to a report by PWC earlier this year, 50% of all respondents said they will be reducing their overall business headcount, 46% are dropping or reducing signing bonuses and 44% are rescinding offers. “We see these precautionary actions more in certain industries. Consumer markets and technology, media and telecommunications companies, for example, are more likely to invest in automation to address labor shortages. At the same time, healthcare is seeing bigger talent challenges than other industries and is more focused on rehiring employees who have recently left,” said the report.

Meanwhile, Mercer’s 2022 Total Remuneration Database (TRD) found that across the Asia Pacific region, there was voluntary attrition rates in the high-tech industry which have been on an upward trajectory compared to pre-pandemic levels, layoffs notwithstanding. Across Asia, China (20%) and India (17.6%) reported the largest number of people moving on, often to competitors. The events of the past couple of months represent at most a “pause” in, rather than a “reset” to, the general direction of travel.

This is consistent with the growing number of layoffs from start-ups that have made the news across Asia. Crypto.com, a cryptocurrency exchange company based in Singapore, cut 5% of their headcount “to ensure continued and sustainable growth for the long term by making targeted reductions.” Shopee, a multinational technology company focusing mainly on e-commerce, is laying off some employees in its food delivery and online payment teams in Southeast Asia.

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