Pandemic Surge Reset
With major layoffs from the past two years, 2024 was projected to be the time for the tech industry to recover. While there were signs of this being true with global IT spend estimated to increase to $5.1 trillion (an 8% increase), jobs are still being impacted. These continued layoffs are being seen as an extension from 2023.
Due to the pandemic, many tech companies went on a hiring binge, believing the digital demand would be permanent. In response, the Great Resignation happened, leaving companies with many vacant positions that needed to be filled quickly. Additionally, many tech companies doubled their workforce, leading to overstaffed departments. To course correct, many giant and small tech companies announced job reductions last year.
AI Adoption
While layoffs in 2022 and 2023 were motivated by the need to downsize after over-hiring during the pandemic, the situation in 2024 seems different. Now it seems layoffs have been influenced by the rapid adoption of AI technology. Since AI has dramatically reshaped the tech landscape, many opportunities and threats have risen.
This new tech has enabled companies to streamline operations, boost productivity, and create new jobs. However, it does pose a risk to those who refuse to adapt and for jobs that can be automated. Earlier this year, Google let go of several hundred staff members from its customer department as part of the company’s plan to automate jobs with machine learning. This latest shift is forcing companies to rethink workforce structure and strategies.
External Labor
The rise of AI was not the only factor in layoffs this year. Many companies opted to offshore their workforce to hire more cost-effective employees and receive lower tax breaks. Some even outsourced work to independent contractors to save recruiting, training, and benefits costs.
With times uncertain in the tech world, it can be nerve-wracking and scary. But this period also presents a unique opportunity for both workers and companies. Workers can discover different career paths or develop new skills to adapt to the changing landscape. Companies can use this time to reconsider company culture and alter their structure to survive future changes with minimal loss. The tech world is known for innovation and adaptation, so this is just another hurdle to overcome.
