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The Cause for Layoffs Within the Tech Industry and What it Means for the Future
Staffing & Recruitment

The Cause for Layoffs Within the Tech Industry and What it Means for the Future

During the past few months, we’ve seen a massive amount of layoffs in the tech industry. Does the amount of falling tech stocks have a part to play?

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Christiana Stankewitz
June 2, 2022

Just a couple of months ago, we were focused on the Great Talent Recession. Businesses all across the U.S. (and worldwide) were struggling to find talent in a time of need. The US Bureau of Labor Statistics was recording one of the lowest unemployment rates of all time, somewhere around 3%.

Although we haven’t seen recorded data for the unemployment rate for the month of May 2022, we’ve seen the amount of tech layoffs across our news and social media feeds. The number of layoffs that have been recorded through layoffs.fyi have included big names like Klarna, PayPal, Netflix, and Carvana, all within the month of May.

Overall, the trend seems to be that tech companies grew significantly throughout the pandemic, and now things are slowing down rapidly. The tech industry is not reaching projected growth for this year, causing panic and slashing of employees’ positions.

For example, Peloton is known as one of the leading tech companies that thrived in the midst of the pandemic. With in-person gyms closing down, Peloton skyrocketed. In early 2021, Peloton’s market value was $47 billion. Fast forward to February 2022, Peloton laid off 20% of its employees with the current market value of $4.29 billion.

Alongside the growing number of layoffs, The Wall Street Journal is mentioning the overall dip in tech stocks; Alphabet, Meta, Roku, Twitter, and Tesla are just a few of the bigger names that have declined. As layoffs continue and growth slows (or declines for companies like Peloton), investors are becoming concerned that the tech industry is losing its value.

Although some are concerned, the need for emerging technology will not evaporate overnight. Economists believe that these layoffs are specific to the niche of companies that grew to thrive during the pandemic; it may not become widespread. There might be other economic factors affecting this, of course, but it shouldn’t spark a global trend of massive layoffs.

As a staffing firm in the tech industry, we’ve seen both sides of the story. Clients we work with come to us with the perspective of the Great Talent Recession, while candidates in the tech space have stories of layoffs. Hopefully, we’re able to play a part in bridging this gap by matching those in need of talent with those in need of new positions.

If you’re a company facing the future of internal layoffs, next steps aren’t easy. Do you let your employees go and outsource the work? Do you face the challenge of investing in the right talent? No matter the situation, we’re here to help.

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ABOUT THE AUTHOR
Christiana Stankewitz

Christiana is Pixoul's Operations Coordinator, focusing on business flow and organization. Her goal is creating smooth and friendly relationships throughout our internal team and client teams.

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