The Bitter Pill of Tech Company Layoffs

Thousands of employees at tech giants have lost their jobs. According to, a site that tracks layoffs in the tech sector, around 200,000 people have been laid off since the beginning of 2022. The four biggest tech companies; Alphabet (Google’s parent company), Meta (Facebook), Amazon, and Microsoft have announced more than 50,000 job cuts in recent months. 

This reduction in employees was carried out precisely when the profits of these technology companies soared. According to Forbes, massive recruitment during the pandemic, conditions after the pandemic subsided, and current economic conditions contributed to this reduction. 

With social restrictions due to the pandemic, online activities are on the rise. As a result, tech companies are making huge profits. Many companies see this as the new normal. Almost all employees work from home. Therefore, they are hiring large numbers of employees. Amazon, for example. Since 2019, the online retail company has added 728,000 employees. It’s so big that there is said to be a talent war. The contenders are mostly software engineers, whose skills are in high demand in the digital era. To attract these engineers, each company is competing to offer exorbitant salaries. 

The next reality? While working from home is gaining acceptance, hybrid working models seem to be preferred. Companies still want face time with employees to share ideas and collaborate, Outside of work, the situation is practically pre-pandemic. People are flocking to get together physically after more than two years of being cooped up at home.   

The main problem is the economic downturn, characterized by slowing growth, rising inflation, and the possibility of a recession. This is the main reason cited by leaders of technology companies. They admitted that they had overspent on recruiting so much talent, mistakenly predicting the acceleration of the pandemic. One of them was Andy Jassy, Chief Executive of Amazon, as quoted by the New York Times.  After the pandemic, people expected the economy to skyrocket. However, the Russian-Ukrainian War changed everything.

Worker attrition, including that of many tech companies, is certainly a harsh reality for employees. However, the impact must also be anticipated by the business world, including for employees who are not affected by layoff. For one, their perception of the company may not be the same anymore. They may feel insecure. Not to mention the issue of employment relationships that must be reorganized. Of course, this is with a note that layoffs occur not because of employee behavior or competence factors. 

A fair process and good communication follow. Employees deserve fair, respectful, and transparent treatment. This includes the company’s reasons for the layoff, which must be reasonable and accountable. After all, they have contributed to the company. After all, they are human beings with feelings, egos, and needs. 

A study by Cascio revealed that layoffs have a negative impact on a company’s stock price. This was true regardless of time, region, and company type. Presumably, this is due to the assumption that companies that conduct layoffs must be in trouble. Besides, according to Pfeifer, layoffs do not correlate with productivity. Most importantly, layoffs should be done as a last resort if there is no other way, after maximum efforts have been made to improve the company’s condition. ©The Jakarta Consulting Group

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