Layoffs Show That Tech Jobs Aren’t Sacred Anymore

(Bloomberg Businessweek) -- For Sydney Russakov, it’s been a year of transitions. In March 2023, she lost her job at a startup called Universe, which offers “no-code” software design tools, when it cut her product manager role. She took a bit of time off before starting a new position at Nextdoor Holdings Inc., the hyperlocal neighborhood social networking service, in June. She was let go again in November, when Nextdoor conducted its own round of layoffs..Losing a job is an experience Russakov is learning to live with. There was “an element of discomfort and surprise that first time,” says Russakov, 31. “The second time around, I think I was in a better place to deal with it.”.The tech industry is also getting used to job cuts. Starting in late 2022, technology companies began conducting rounds of layoffs that were deeper and broader than anything in recent memory. So far this year, over 32,000 tech workers have lost their jobs, according to Layoffs.fyi, a startup that’s been tracking the metric in the industry since the pandemic. Alphabet, Amazon.com, Microsoft, Salesforce, Snap and Zoom have all announced head count reductions in recent weeks. On Feb. 7 Bloomberg reported that Tesla staff are bracing for potential jobs cuts. .The cuts have caused a sense of unease throughout tech, which has long been one part of the economy where work has been easy to come by, well-paid and safe. Affected employees have taken to social media to broadcast the conversations that preceded their departure—and some of the axing videos have gone viral. In one video posted to TikTok, a marketer named Joni Bonnemort nods along as an executive on a Zoom call talks about “some pretty drastic changes in the business.” After the call, Bonnemort turns to the camera and bursts into tears..As is often the case with social media, these personal crises don’t necessarily add up to a national trend. Unemployment is below 4%, and the US economy continues to add jobs. US companies increased their payrolls by 353,000 in January, the highest number in a year, surpassing predictions. The latest data from the US Bureau of Labor Statistics show that “layoffs and discharges” are at the same low levels where they spent much of 2023..The information industry, which in the BLS’s classification includes tech, media and publishing, has fared better than many others. Tech companies themselves have continued to hire even as they’ve let some workers go, with the industry ending January with 18,000 more employees than the month before, according to a report released by CompTIA, which tracks tech industry trends. (The group calculates that there are 9.6 million people in the overall US technology workforce, which includes people working for tech companies and those working in tech-related roles in other industries.).Still, the latest round of cuts does suggest something has changed. There has long been a cultural taboo around layoffs in Silicon Valley, where employers went to great pains to woo and pamper talent. Along with stock options, cruise ship-worthy buffets, free shuttle buses and on-site dry cleaning, job security was one of the most powerful attractions to tech companies racing to hire skilled software engineers..That taboo has now been broken. “The shine of tech jobs is wearing off a bit with these layoffs,” Jeff Shulman, professor at the University of Washington Foster School of Business, wrote in an email. Some industry leaders have characterized the shift as a return to a purer kind of tech enterprise. As Meta Platforms Inc. Chief Executive Officer Mark Zuckerberg said in an company Q&A quoted in the newsletter , he doesn’t want to have “managers managing managers, managing managers, managing managers, managing the people who are doing the work.” He wants more people pounding Monster energy drinks and shipping code and fewer of them “checking in” with colleagues and setting up Zoom calls..However, there’s another interpretation: The industry is just becoming more like the rest of the economy. During the pandemic, tech seemed to inhabit its own reality. While other businesses struggled as global supply chains fragmented and people were trapped at home, the industry boomed. Profits were fat, and companies furiously hired engineers, project managers and software salespeople to try to keep up with demand. Tech CEOs proclaimed the world had entered a new era—not only of remote work, but of tech-centered virtual human interaction..In the industry, says Tim Herbert, chief research officer at CompTIA, “historically there have been periodic pendulum swings between ‘all in’ on innovation to ‘all in’ on business fundamentals.” With plans to change the world and easy access to cheap capital, Silicon Valley companies have a reputation for spending big to develop technologies and lock in customers without regard for short-term profits..The job cuts are a sign that things are now swinging the other way. Growth at tech companies has slowed, and higher interest rates have choked off much of the money that for years fed startups, even as the broader economy continues to expand at a healthy clip. And so Silicon Valley is settling into a pattern familiar in many industries: Companies hire when times are good, let people go when they’re not—and sometimes let people go even when they’re not so bad..Russakov is still looking for work, but hasn’t given up on the industry. “I still want to be a product manager,” she says. “It has not reduced my hunger to stay in this industry and build things and work on a team. I think I’m just gonna be a lot more diligent.”.Herbert believes that “the current lull will eventually be followed by a new wave of startups, investments and digital pursuits.” When the pendulum swings that way again, tech companies can hire with abandon, secure in the knowledge that if things don’t work out, they can just let people go..(Updates paragraph three with information about fears of job cuts at Tesla. Previous editions corrected Russakov’s job title and the context of Mark Zuckerberg’s quote).More stories like this are available on bloomberg.com.©2024 Bloomberg L.P.

Layoffs Show That Tech Jobs Aren’t Sacred Anymore

Job cuts used to be taboo in Silicon Valley. Now they’ve become a part of life, even for companies that are doing well.

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