Companies and professionals alike continue to monitor the ongoing layoffs. As of August 2023, online tracker Layoffs.fyi has logged over 226,000 employees laid off across 943 companies—and the numbers keep rising.
While not surprising to those who have weathered the dot-com crash and the Great Recession, this cyclical crash continues to affect all levels of the tech and IT industries. As the landscape changes, let us examine how tech layoffs have impacted different market segments, from multinational conglomerates to local startups.
Identifying and Differentiating the Tech Market Segments
Like any other industry, we can divide the tech market into segments based on the company’s size. Fortune 500 companies set the example when discussing enterprises, often retaining over a thousand employees and generating around a billion dollars in annual revenue.
While the term technically refers to an organization that generates products and services, it is commonly associated with large companies that sometimes operate across different countries and regions.
In the tech space, enterprise-level companies have been responsible for 45% of software buying activities since 2020, a Trust Radius survey revealed.
Zooming in closer, mid-market companies typically fall within the upper range of the Small and Medium-Sized Enterprises (SME) category. They feature a workforce of 101 to 500 employees and generate annual revenues ranging from $10 million to $1 billion, positioning them just below enterprise-sized organizations.
Under the mid-market businesses, you have the rest of the SME sector, which comprises smaller entities with smaller teams and generally smaller revenue figures.
Startups and Government Contractors
Aside from the size of an enterprise, it’s also worth considering the nature of the business and the space it operates in. Government contractors and partners, for example, can come in all shapes and sizes. Private firms that acquire government contracts serve as an economic indicator, with analysts frequently evaluating them based on the number of contracts they secure and the value they generate. In the 2022 fiscal year, Bloomberg Government revealed that the United States Federal Government awarded $705 billion.
On the other hand, startups often organize themselves into small teams. More accurately, a startup is a business entity in the early stages of its development. As such, they have smaller teams and revenue, although TechCrunch explains that a company stops being a startup after crossing the $50 million revenue mark or having reached a valuation of over $500 million.
The Impact of the Layoffs on Big Tech
In the tech and IT spaces, most enterprise-level entities are part of what is collectively known as Big Tech. They are often tagged in the headlines, especially since larger enterprises have announced more significant job cuts. Here are some of the most extensive job cuts announced from the previous year until August 2023:
Google is the flagship subsidiary of the multinational tech conglomerate Alphabet. Over the years, it has amassed over 232 companies with costs exceeding $20.89 billion, according to the US Forex website.
At the start of 2023, Alphabet announced a 6% workforce reduction over the following months. According to CEO Sundar Pichai, this reduction percentage translates to the company cutting 12,000 jobs, a direct response to their prior recruitment efforts, which were geared “for a different economic reality than the one we face today.”
In May 2023, Canadian e-commerce giant Shopify laid off 20% of its workforce and divested its entire logistics arm to the supply chain company Flexport, NBC News reported. These layoffs affected 2,300 employees and marked the second wave of job cuts following the initial firing of 1,000 employees in July 2022.
One of the Big Tech firms that hired massively to meet pandemic demands, Amazon, laid off 18,000 employees in November 2022 and January 2023. In March, another wave of job cuts affected 9,000 people before the company released another 80 professionals from its pharma division, according to CNBC online.
A recurring trend among Big Tech firms is their effort to realign resources as post-pandemic demands diminish. This realignment of resources means these companies are rehiring positions that match their new needs and targets. For instance, the online job marketplace TrueUp maintains a listing of companies with job openings, presenting the following data as of August 2023:
- Amazon has 8,764 openings despite laying off 28,000 people across 19 job events.
- Google has over 2,000 openings after laying off 12,000 employees across four events.
- Meta, Facebook’s parent company, has a few hiring positions available (725) after releasing over 21,000 employees across 12 layoff events.
A Surge in the Mid-Market and Smaller Segments
A closer look reveals that the job cuts mostly come from Big Tech. Things are more mixed in the mid-market, with some companies forced to lay off workers while others continue hiring new team members.
Moreover, this situation has given rise to fresh opportunities within the small and mid-sized enterprise segments. Notably, specific top-tier talents in the field, typically sought by premier companies, are now accessible for other businesses to seek out and employ.
One example is Aspen Technology, Inc., a software firm operating in Massachusetts. Data showed 3,574 as of June 2022, or 88.40% growth in its local workforce from the preceding year.
Startups and Government Opportunities
Despite the overwhelming number of employees laid off, US job service firm ZipRecruiter found that 80% of these workers could find jobs within three months.
An intriguing trend is the emergence of what are dubbed ‘Revenge Startups.’ Rather than seeking new employment, some employees impacted by job cuts have proactively pursued their own initiatives.
Y Combinator posted that it received over 20,000 applications for venture capital funding for its Winter 2023 season, although the startup accelerator funded only 282.
The fallout in the private and corporate sectors of the tech and IT industries also opens up opportunities for the government. Government data show a decreasing trend in government tech workers under certain agencies for the first time since 2014, which we can attribute to the same factors driving Big Tech layoffs.
However, the ongoing changes in public-sector tech also mean more positions to help boost the government’s capabilities in terms of cybersecurity, financial transactions, and UI/UX—particularly at the state and local levels.
However, this is wider than government career employees, as more agencies are looking into outsourcing their tech responsibilities to private contractors.
Position Yourself in the Changing Tech Market
Comprehending the impact of tech layoffs on industry segments unveils numerous valuable insights for business owners and professionals. First, in light of the post-pandemic scenario, the industry, in general, is undergoing a paradigm shift that requires Big Tech to realign its organizations and refocus its resources.
Second, the tech layoff is a unique event that negatively affects all levels of the industry. The departure of tech professionals from enterprise-level companies doesn’t leave them in limbo; they either join mid-market companies and startups or begin their own startups.
If you want to join the transforming IT and tech spaces, now is the best time. At Yellow Tail Tech, we equip you with the requisite knowledge and skills to facilitate a smooth transition into becoming a certified IT professional. Get started by booking a 10-minute intro call with an Enrollment Advisor now!