While the tech industry has a long history of layoffs, the ongoing wave has brought back painful memories of the dot-com crash for many people. Thousands of tech workers were left unemployed in the wake of that disaster, and something similar could happen again if things don't change soon.

Layoffs are often attributed to a lack of funds or poor revenue, but they can also be the result of structural problems in the industry. For example, the way venture capitalists invest in startups often leads to a boom-and-bust cycle that makes layoffs more likely.

The tech industry is known to be notoriously volatile, and companies are always looking for ways to cut costs. Tech giants like Microsoft, Google, Facebook, and Apple have already started trimming their fat, eliminating thousands of jobs in their workforce.

More than 1,000 internet companies made at least 154,000 layoffs last year, as per Layoffs.fyi, a website that has been monitoring tech layoffs since March 2020. Also, more than 37,000 layoffs from around 122 companies have already been reported this year, according to a figure released by the website.

The American tech companies that cut the most positions last year, according to statistics, include:

  • Meta: 11,000
  • Amazon: 10,000
  • Cisco: 4,100
  • Carvana: 4,000
  • Twitter: 3,700
  • Snap:1280
  • Better.com: 3000
  • Uber: 3700

Why Tech Companies Are Cutting Jobs In 2023?

The recent wave of layoffs has several causes. One of the most prominent reasons is the tech sector has been significantly impacted by the pandemic. As a result, businesses are struggling to survive amid declining demand for goods and services. This has caused many businesses to struggle with a decrease in revenue, which in turn, resulted in less hiring and more layoffs.

Another factor is that many businesses are going through digital revolutions, which often include letting go of long-standing staff who aren't adept at using new technology. At the same time, the interest rate is fairly high right now. Due to an increased cost of borrowing money, businesses are less likely to do so when trying to reduce costs.

Layoffs may continue as businesses strive to respond to a slower global economy and weaker demand.

Other reasons might include:

1. The skills required for certain tech jobs are rapidly changing, and companies may decide to let go of employees who are no longer able to keep up.

2. The cost of living in many tech hubs is skyrocketing, and companies may be looking to reduce their overhead by firing high-paid workers.

3. Automation has started replacing tech employees, so companies may be firing employees to save money on wages.

4. Uncertain economic environment, which has made businesses hesitant to invest in new projects or hire new employees.

Why Companies Are Cutting Jobs In 2023?