Big Tech Employee Numbers Before and After the Pandemic Tells the Real Story
The tech industry has been making headlines for laying off thousands of employees since the COVID-19 pandemic hit. However, the truth behind the numbers is more complex than sensationalist headlines suggest. To better understand the state of the tech industry, we need to examine more than just attention-grabbing headlines.
Why Tech Companies Laid-off Workers in 2022 and Are Still Laying Off Workers in 2023?
The financial struggles many tech companies faced and that some are still facing today are due to the COVID-19 pandemic, especially Amazon, which ramped up hiring to process orders and get packages out to customers faster. Closely behind were Microsoft, Meta, and laptop manufacturers, such as Lenovo, Dell, and HP, which also ramped up hiring to meet the demand of customers who were spending more time stuck at home because they were either forced to work remotely or had to adhere to lockdown or quarantine requirements.
But things changed when COVID-19 vaccines from Pfizer, Moderna, Johnson & Johnson, and others became widely available. People started working in-office instead of remotely. As a result, the demand for laptops, smartphones, and other tech gadgets fell sharply. Subscription television networks, such as Apple TV, Hulu, and Netflix, and video software conferencing companies, like Zoom and Webex, saw similar declines.
And it does not end there; PayPal, Stripe, Venmo, and similar payment platforms that ramped up hiring to accommodate increased sales from eBay, Amazon, Etsy, and the like saw a drop in revenue once people stopped shopping online and returned to working outside their homes. Long story short, supply exceeded demand. While COVID-19 contributed the most, it is not the only thing to blame for the thousands of layoffs in the tech world. Available data shows the country’s battered economy, inflation, and higher interest rates added and are continuing to add fuel to the fire.
Are Things as Bad as They Seem in the Tech World?
There is no denying tech that layoffs were and are still happening, and, at first glance, this is bad for individual workers and the economy. But according to several studies, many tech companies that have let thousands of workers go are merely “right-sizing” after over-hiring and overexpanding to meet consumer demand during the COVID-19 pandemic. But the subsequent decline in consumer demand forced many companies in the tech sector to rethink their priorities and adjust their operating expenses accordingly, which led to many of them reducing their workforce to pre-pandemic levels. However, even with that reduction, companies like Meta, Alphabet, and Amazon, for example, still have high employee headcounts and numbers of software development teams, which suggests they were over-hiring and overexpanding long before COVID-19 came along. So, in their case, mass layoffs are necessary, while hard on the economy and especially hard on the individuals who are left jobless.
Before and After Tech Layoffs: Numbers Speak Louder Than Words
In an article published by Business Insider, the impetus for mass layoffs in the tech industry is made clear. And that is because it used numbers to convey what has been happening in the tech industry over the last few years, particularly with major corporations like Microsoft, Alphabet, Amazon, and Meta. Starting with Microsoft, the article found that despite reducing its workforce by 5% or roughly 10,000 workers, Microsoft’s overall employee headcount remains well above what it was on March 11, 2020, which is right around when the World Health Organization (WHO) declared COVID-19 a pandemic.
Things are a little different with Alphabet. After laying off 6% or roughly 12,000 workers, it returned to mid-2022 pre-pandemic workforce levels. Although still higher than it should be, Alphabet’s work-to-employee ratio is more in step with current business needs. As for Amazon, even after cutting 18,000 jobs, right around 5% of its workforce, the company’s employee headcount is still above what it was in 2021. To get back to a pre-pandemic employee headcount, Amazon might cut more jobs before the end of 2023, according to CEO Andy Jassy.
Meta is unique in that the company, which comprises Facebook, Instagram, and WhatsApp, was doing altogether that well before COVID-19, mainly due to over-investing in CEO Mark Zuckerberg’s metaverse ambitions, which never took off as he had hoped. COVID-19, alongside a shaky economy, inflation, and higher interest rates, made things worse. But after cutting 11,000 or roughly 13% of its workforce, Meta’s employee headcount is back to where it was in 2021.
In summary, despite the unfortunate layoffs in the tech sector, things are not as bad as some publications have made them out to be. Here are some actionable steps you can take to gain a better understanding of what is happening in the tech industry:
1. Look beyond headlines: Don’t rely solely on news headlines. Instead, do your research and read articles that provide context and data to gain a better understanding of the situation.
2. Consider the reasons behind the layoffs: While COVID-19 played a significant role, other factors, such as the battered economy, inflation, and higher interest rates, contributed.
3. Evaluate the response of tech companies: Some tech companies were over-hiring and overexpanding to meet consumer demand during the pandemic. As a result, layoffs were necessary to “right-size” the companies and adjust operating expenses.
4. Look at employee headcounts before and after layoffs: By examining employee headcounts before and after layoffs, you can better understand the scale of the layoffs and the reasons behind them.
5. Consider the long-term implications: While layoffs can be hard on individuals and the economy, they may be necessary for companies to adapt to changing market conditions and stay competitive in the long run.
By following these actionable steps, you can better understand the real story behind the tech industry layoffs during and after the pandemic.
