Mehan elaborates on the potential reasons behind the mass layoffs by the big tech giants and also projects the future outcomes. Keep reading on to know more!

Mehan has brought an amazing discussion for today! You must have heard about the mass layoffs recently. It’s all over the internet and social media nowadays. Let’s discuss what’s behind these events and how they can affect the future world economies!

We have seen how some of the big tech companies have simultaneously laid off major chunks of their workforce. If one company takes such a route, it can be overlooked! But when renowned companies like Google, Microsoft, Amazon, Meta, etc. jointly dismiss their employees, it is bound to impact the outlook of global businesses!

There are multiple critical reasons behind the big tech layoffs.

Let’s look into them!

1.      Over Hiring During the Global Covid-19 Breakout 

During the spread of Covid-19, companies all over the world initiated mass hiring. Businesses started operating online via ecommerce platforms. This created various job vacancies and some companies like Amazon got even bigger during the peak pandemic era.  

According to The Economic Times, the oil-rich Gulf region opted to fill most private sector job vacancies with foreign workers during Covid. Other than UAE, many countries over hired to operate their business via online platforms especially in the digital and tech field, says EMLV.

Now, when the world has finally recovered from the Coronavirus, we can pretty much understand why mass layoffs are happening. Physical stores are back and the normal course of on-site business is picking up the pace again. It shouldn’t be astounding to see big tech companies simultaneously laying off their employees like this.

2.     Post Pandemic Recovery

The US Bureau of Labor Statistics reports 269,000 jobs being added to the US economy in 2021 right after slight recovery from the pandemic. This shows that even when the pandemic was coming to its end, mass hiring continued.

In an attempt to stabilize the economies and deal with the pandemics after effects, countries quickly invested in human assets. This is another reason for mass hiring!

3. Inclination Towards the AI Revolution

Recently, the big tech giants have started taking quite some interest in AI revolutionaries like the famous ChatGPT, a product of OpenAI. According to The Wall Street Journal, Meta has invested $24.655 billion on AI R&D at Alphabet last year. Microsoft is up to spending $10,000 billion in OpenAI and will have a 75% share in the company, says 5 Things to Know this Morning .

Similarly, Google and Amazon have established close relationships with some AI startups that are building their own AI language models like Cohere in Toronto and AI21 Labs in Israel.

Stats for Big Tech Mass layoff Drive

Time reports some tech layoff statistics. Meta has cut down 11,000 workers, Amazon declared 18,000, Salesforce reported around 8,000 dismissals. According to spice works Google has announced up to 12000 layoffs around the world. Similarly, Elon Musk laid off 4400 contractual workers at Twitter, says The Economic Times.

These were just some figures of renowned organizations. Many other companies have also taken the same path and collectively around 150,000 tech employees have been terminated as estimated by Time.

With this much going on among the big tech companies, we can gauge the philosophy behind it. The tech giants are introducing mass termination laws because the technology world is evolving.

We cannot blame the tech companies for laying people off. It’s a natural phenomenon and Aaron Benanav, the author of ‘’Automation and the Future of Work’’ precisely puts it in the following words:

“Going back 200 years, there have been waves of fears about automation, in which people look at new technologies and get scared that they are going to fully replace human labor,”

According to Time, in the same context a Syracuse university professor said:

“And so far, all the predictions have been proven wrong.”

These are normal courses of evolution in business and only the ones who grow with it win the race eventually.

4. Fear of Recession

A reduced rate of hiring and extensive layoffs can be a sign of looming recession as reported by make it. People and governments across countries are anticipating a wave of recession. This could be due to the Corona pandemic or as elaborated by HumanHub in its article Effect Of Recession 2023

Richardson claimed that:

‘’It’ll be a different kind of recession than we’re aware of,” which are “primarily driven by inflation and higher interest rates”

These are just some possible causes that Mehan is putting forward for you. Let’s see what will be the implications of mass termination across the globe.  

The Ultimate Out-Turn of Mass Layoffs

Mehan will now forecast the consequences of the recent big tech firing events. We have discussed above that more than 150,000 highly skilled tech workers have been dismissed.

Beware! These are not ordinary people. They were recruited by prestigious organizations that have extensive hiring and on-boarding processes. Therefore, we can gauge the quality of this unemployed chunk of techies.

Such a major influx of capable human resources into the industry will adversely affect the unemployment rate. This is because these people will be given priority over the already existing jobless candidates. The companies will try to approach this segment first, and might even try to create space for them, which in turn can lead to more layoffs.

On the contrary, the HR would have options to recruit from. Good for them! But it would be harder for the unemployed people to keep their hopes high.

Fear will start looming among the working class that at any time their company could take the route of mass layoffs. Employed segments will start to expect the same from their supervisors. This would divert their focus and productivity levels will negatively be influenced as a result.

On a serious note, it will impact the employee’s mental health. Workers will not just under perform, but would be unable to maintain a work-life balance. Employee job satisfaction and motivation levels will eventually go down. Even the top tier employees will have second thoughts; should I give in my best, what if I get laid off too?

This would also channelize the responsibility of devising mental health programs to the HR in future. The HR efforts will be wasted and they will have to empower the employees all over again.

When uncertainty starts to prevail among the workers, job insecurity increases.  As a result, people start looking around for better and stable job opportunities. Ultimately, companies suffer with demotivated workforce and high attrition rates.

Winding Up!

Today Mehan has discussed all about the reasons and trajectory of recent mass layoffs by the big tech companies. We cannot point figures at anyone and no one can be held accountable for introducing the mass termination laws. This is how the world has been growing ever since and we have to keep up with it.

Always remember that every evolution has its price and also reaps rewards right away!