Tech layoffs are gaining momentum – the past week alone has seen staff cuts by Alphabet, Spotify, Microsoft and Salesforce.

On Tuesday, Spotify announced it will cut 6 percent of its workforce.

The Swedish music-streaming giant has about 10,000 employees.

Spotify’s CEO, Daniel Ek, wrote: “In hindsight, I was too ambitious in investing ahead of our revenue growth.”

Similarly, on the 18th January, Microsoft announced 10,000 layoffs. Their CEO, Satya Nadalla said that the company will refocus on “secular growth and long-term competitiveness.”

Why does this snowball seem to keep rolling? And is there ever a right way to handle layoffs? HRreview has gathered expert insights.

Mike Morini, CEO of WorkForce Software:

“The tech industry is exiting a period of ‘growth at all costs’ – including large tech brands that originally saw high growth during the pandemic even as other industries struggled. Many tech companies over-hired when access to growth capital was plentiful. Afterall, it’s in the industry’s DNA to innovate and explore new growth opportunities amid times of disruption.

“However, with recession worries and growth capital shutting down, organisations are no longer placing big bets on unproven futures. Now, with capital availability highly restricted, the tech industry is seeing increased scrutiny on experimental growth initiatives. Many tech firms are returning to unit economics that prioritise profitability over growth. To deliver against this pivot, organisations have had to take actions that include staff layoffs.

“At this moment in time, digital management tools will be more important than ever to ensure we don’t see a second crisis of staff burnout and disengagement, with consolidated teams needing to do more with less.”

Alexia Pedersen, VP of EMEA at O’Reilly

“Redundancies are not made lightly. Organisations are considering several factors and deciding to reduce costs given the current economic uncertainty, with forecasted numbers showing a reduced demand for services and products.

“The technology sector stands out because there has been a period of rapid acceleration in digital transformation over recent years. This was accentuated by the pandemic, as many businesses had to rapidly move to an online presence in a very short timeframe. New skill sets were hired, and employees were upskilled to help organisations transition. Some of these projects have now been completed and talent is no longer required, whilst some of these projects are still underway, budgets are being cut in line with the economic projections being suggested by many economists.

“Britain currently has its lowest unemployment rate since 1974, and while the tech sector has taken a global hit, the UK hasn’t felt it so strongly. While headlines emphasising the mass layoffs dominate the media, the numbers aren’t matching up. At Meta, 650 staff out of 11,000 total were laid off in the UK, yet the roles for tech companies remain open.

“Some tech companies will want to take a cautious view and prepare for what may lie ahead by reducing costs, but the situation in the UK isn’t necessarily mirroring the global trend.”

 

 

 

 

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 the 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.