Life in the time of layoffs: What lies ahead for the tech world?

A software developer based out of Bangalore usually started his day with meetings, most days from his home as the world changed into a hybrid model of working post-pandemic. Things were going well and he felt like he had progressed in his career too. However, his world was turned upside down, when, out of the blue, he was told that he would be laid off, but not in so many words.

A recent B-Tech graduate knew this was an exciting time in his career. His first job. But within a few months of securing the job, he was told that he was ‘impacted by the reorganization process in the company’. “When you get placed, your family's responsibility, their expectation, dependency, increases on you,” the techie said while sharing about how getting a job was such a big thing in his family till it came crashing down.

He said there were rumours of layoffs but no one knew for sure what actually was happening. It was confirmed for him the day he got a call from the top management, saying had to resign the same day. “They told me you have been impacted as per the recent company organization restructuring and they told me to resign the same day. If you are going to lay off people, why are you hiring them on a hike in the first place? Why do you want to hire so many people when you are laying off your current employees.”

“I do have responsibilities at home. Suddenly you don’t have a job anymore. It is not like I cannot get a job, I have the capability but you could tell me beforehand if you're firing me.”

This is the story of thousands of others in the tech space. People are losing jobs overnight. They are putting up a fight. But it has not been an easy one.

This year has been a turbulent one for technology companies around the world. It seems to be the cumulative effect of various factors – 2 years of the pandemic, the Russia-Ukraine war, manipulation of markets by some redditors, and interest rate hikes to name a few. Since the middle of 2022, people have been losing jobs all over the world.

From the ‘Great Resignation’ phase to the mass layoffs, it has been a tumultuous year. What does the tech space look like in the future? Is there a light at the end of this tunnel?

Any hopes?

According to Hareesh Tibrewala, Joint CEO of Mirum Capital, “Immediately after Covid, we saw a surge in demand for IT services, resulting in a huge demand for human resources. There was the Great Resignation too, and all businesses went into over-planning for new expected opportunities. We are now seeing a kind of correction. The Ukraine war has definitely made businesses slow down their investment in IT, and therefore all the over-hiring is being reversed by way of these layoffs. Also, venture capital which goes through cyclical ups and downs, is now on the downward curve and the focus is more on profitability rather just top-line growth.”

Some other industry experts also told e4m that the layoffs were a reflection of the pressures on the economy.

As for Viren Razdan, Managing Director, Brand-nomics, tech companies quickly moved to digital adoption only to face the harsh reality of people getting back to old habits. “The dismantling of the models has resulted in widespread rationalizations and the layoffs are a result of that.”  

Tibrewala, however, sees light at the end of the tunnel. “IT businesses and services are here to stay and to grow. What I am seeing is more of a correction. What goes up very quickly, also comes down very quickly. And to me, this should be an opportunity for Indian IT businesses.

Echoing the sentiment, a senior industry player said: "The trend will reverse once the war is over and the economy reopens. But things look difficult for the next 6 to 8 months.”

"Most tech companies did phenomenally well during Covid. So, they hired more than the required number of people. Now they are under pressure to show revenue and growth," he added.

Talking about the factors that led to tech giants giving out pink slips, Razdan said, “The Covid phase dented companies across categories with rationalisation and realisation became the new mantras. Companies with over-inflated valuations are suddenly being questioned about perpetual losses totting up in the hope of a mirage-like value. Some of the hi-profile IPOs with sky-rocketing values have nose-dived with investors running out of patience of the distant mirage or golden pot at the end of the rainbow.” 

Speaking further about the uncertainties, Razdan said: “The changing dynamics of this emerging economy retain the buoyant optimism but the wake-up call is real. As many look down upon Elon Musk’s obsession with delivering monetisation, investors would be secretly (or-not-so-secretly) soon be singing the same song. We’ve lived in the over-hype of ideas with fabulous models of valuations but the stepping stones require more than just fancy presentations, backed skilfully. The new gameplan has to have reality and a plan to build capabilities, cash-burn is not cool anymore.” 

Sharing insights on the economic situation and what lies ahead was another industry player, “2022 was dominated by economic challenges presented by the Ukraine war and China’s zero-Covid policy. The pain on account of both should decrease in 2023. Oil prices have started cooling off and alternate sources of fuel are being identified. China has also relaxed its zero-Covid policy. I see an improvement in the economic conditions by mid of 2024.”