We have seen a shift in the way companies operate in recent years, with technology playing a significant and growing role in the shaping of the global economy, says Jonathan Shroyer.

While the technology industry has been responsible for creating millions of jobs, particularly at the height of the pandemic, it has also seen a wave of mass layoffs as the economy struggles to bounce back.

Companies, both big and small, have struggled with maintaining profits and cutting costs, leading to many employees losing their jobs. There are reasons behind mass layoffs, and it is crucial to examine what could have been done to prevent them, and explore what companies can do to prevent future layoffs. 

Why have there been so many layoffs? 

One of the reasons for mass layoffs is the need to cut costs. Companies are always on the lookout for ways to increase their profits and remain competitive in the market. This means that they are constantly evaluating their expenses, including labor costs. In many cases, companies may resort to mass layoffs as a way to reduce their expenses and improve their bottom line. This is especially true in the tech industry, where companies are under constant pressure to innovate and remain ahead of the curve.

We have also seen the tech industry as a whole battle between profits versus growth, when interest rates were low, the ability to grow was valued. Now, the economy is more tense for businesses and people, meaning that the bottom line is profits. Tech companies that previously valued innovation, especially younger ones, are at a high risk in general, and unfortunately we are seeing this play out with mass layoffs. 

The COVID-19 pandemic has also had a significant impact on the tech industry, leading to many layoffs. Tech industries during the pandemic were extremely successful. Companies and people were needing tech equipment, applications and capabilities to adjust to a remote, distanced life. As people are adjusting their norms to a post-pandemic world, people are eager to reconnect. Areas that suffered during the pandemic are recovering, while booming pandemic industries are feeling the strain. As a result, many companies have been forced to lay off workers to cut costs and remain afloat. 

What could have been done to prevent these mass layoffs in the tech industry?  

One way that mass layoffs in the industry could have been prevented is through employee investment via employee training and development. Technology is constantly evolving, and companies need to ensure that their employees have the skills and knowledge required to keep up with these changes. By investing in employee training, companies can help their employees stay up-to-date with the latest technologies and improve their job performance.

This can help reduce the need for layoffs and improve the overall productivity of the workforce. Training and development in the tech industry is underrated and undervalued, and it is partially responsible for this constant turnover and shifting of the industry as companies constantly try to innovate the next big thing rather than create a sustainable business.  

Can they be stopped? 

Another solution is to diversify revenue streams. Companies that rely on a single revenue stream are more vulnerable to economic downturns and other factors that can affect their business. This includes companies that rely on VC funding and have not adequately developed their primary sources of revenue. By diversifying revenue streams, and focusing on revenue more than investment, companies can reduce their dependence on a single product or service and reduce their exposure to risk. This can help companies weather economic storms and reduce the need for layoffs. For example, AI companies should not put all their eggs in one basket with one type of AI technology. Rather, they should offer a menu of AI-driven solutions that gives them more flexibility and opportunity overall. 

Companies can also take steps to improve employee morale and job satisfaction. Mass layoffs can have a significant impact on the morale of the remaining team members. By creating a positive work environment and promoting employee engagement, companies can better retain their employees. For industries like big tech, while it is a huge industry, it also is a fishbowl. If you run a company that lays off employees regularly, that will become the company’s reputation in the industry, resulting in fewer candidates seeking you out, which can ultimately lead to you losing out on great individuals who would drive your company to new heights. 

How can companies prevent future mass layoffs? 

It is essential for companies to take steps to prevent mass layoffs. Here are three ways that companies can prevent mass layoffs: 

 1. Hire based on company success 

Companies can prevent mass layoffs by hiring based on company success. This means that they should only hire employees when there is a clear need for their skills and expertise. This need should also be backed with funds and incoming regular revenue to pay for the employee, rather than depending on the employee’s work to secure the funds, or depending solely on investment funding to support a role. 

Companies should conduct workforce planning to assess their current staffing needs and anticipate future workforce requirements. Companies need to align their workforce with their business goals and avoid hiring based on short-term demands.   

2. Equally balance innovation and profits 

The tech industry is struggling to balance the need for innovation and the need for profits. Companies must balance the two to prevent mass layoffs. While innovation is essential to remain competitive, it can also lead to increase in costs, especially if the search for innovation is futile. Companies should carefully evaluate their investments in research and development and ensure that they align with their current business goals and financial resources. 

At the same time, companies should also focus on increasing their revenue and profits. This can be achieved by improving their sales and marketing efforts, optimizing their operations, and implementing cost-saving measures. By equally balancing innovation and profits, companies can maintain financial stability and reduce the need for mass layoffs. 

3. Utilize contract or part-time workers during periods of unprecedented growth 

Companies can also consider using flexible work arrangements such as contract work and part-time work to adjust to changes in demand. This is especially important for companies that experience fluctuations in demand, like the tech industry. This can prevent overstaffing, which is a huge part of why mass layoffs happen. 

Companies need to ensure that they treat their contract or part-time workers fairly and provide them with the necessary training and support. This can help ensure that they have the ability to fully contribute to the success of the company. Too often companies will employ part-time or contract workers without giving them the necessary training, leaving the full-time employees to carry the burden of training without the just compensation. 

Mass layoffs can have a significant impact on the employees, the company and even the industry as a whole. We have seen the tech industry be impacted by such layoffs, and across all industries company leaders need to examine the causes of this to prevent future, preventable, mass layoffs to the best of our abilities.  


Jonathan Shroyer is Chief CX Innovation Officer at Arise Virtual Solutions and Arise Gaming.






Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.