Mass layoffs in technology: End of total free in the digital sector

The massive layoffs in technology companies unleash alarm in the sector, which knows that it will have to continue readjusting staff until inflation puts the brakes on or the war in Ukraine ends.

With the help of experts we analyze in COPE what consequences will this seismic movement have in the business world Y in the final consumer of these products.

To understand this phenomenon, it is necessary to know that the business world has undergone a 180º turn towards digitalization in the last decade and that has meant that a few companies have grown so much that they have become “big tech”, digital giants. They are well-known companies, such as Amazon, Twitter or Netflix, which saw their profits increase during the coronavirus pandemic. Hiring in the sector skyrocketed and so did profits. The “big tech” experienced strong increases in their price, as was evident in the evolution of the Nasdaq 100 (US index of the main technology companies) which accumulated significant increases, before falling sharply in the last months of 2022.

However, 2023 begins with massive layoffs in technology companies that have put large and small investors on alert who know that they will have to continue readjusting their workforces, as they did last year. Since mid-2022, the digital sector totals more than 150,000 layoffs (90,000 only in the last three months of 2022). The last to join has been the consultant salesforce and affects 10% of the workforce (7,000) employees). In addition, Amazon has announced 18,000 layoffs, publicly traded applications have plummeted, Twitter (3,700, around 50% of the workforce) Meta will lay off 11,000 employees, Netflix 500…, to cite only the best-known examples.

John Philip Jungprofessor in the Department of Economics at the Comillas Pontifical University ICAI-ICADE confirms in COPE the “enormous uncertainty that the digital sector is experiencing because inflation is still very present both in Europe and in the US and it is not known what will happen with the war in Ukraine. The latter has generated an increase in energy prices and has subjected supply chains and logistics to significant stress, which opens up a question of great dimensions tied to the global situation.”.

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Mass layoffs in technology: End of total free in the digital sector