Technological advancements have enabled modern living and its conveniences, impacting various sectors such as energy, transportation, finance, healthcare, and commerce, all of which rely heavily on electronics and IT infrastructure.
When the tech layoffs went into full swing in 2022, the entire world was watching as Big Tech companies and startups had to lay off employees, affecting over 223,000 people as of August 2023. However, this significant shift in the tech and IT spaces sends ripples across other industries.
In this article, we will examine the impact of the massive tech layoffs on other industries, explore emerging trends in the general labor market, and identify opportunities for tech and IT professionals.
How Tech Affects Other Industries
Until today, tech layoffs have primarily affected tech companies or those operating in information technology, e-commerce, communications, electronics manufacturing, and related sectors.
While the exact reasons for each company’s existence may vary, two main factors are generally behind these layoffs.
First: Navigating a Post-Pandemic Market
The first factor is the slowing of demands after the global coronavirus pandemic. When COVID-19 spread around the world, it necessitated lockdowns and travel bans. To keep businesses operational, they had to move into remote working arrangements to sustain operations. These changes have created new demands and accelerated the research of new technologies.
For example, The New York Times reported that Amazon, at the height of the pandemic, hired 427,300 employees in ten months, from January to October 2020. While most are warehouse workers, the tech giant has also onboarded software engineers and hardware professionals to support its services, most of which also saw significant growth during the pandemic.
Now that the health crisis has started to subside, so have the demands it created. Regarding Amazon, the massive company announced in March that it was letting go of 9,000 more employees after a more extensive job cut that affected 18,000 staff members across different departments and business units, as CNBC outlines.
Second: AI-driven Paradigm Shift
Another significant technology trend in recent years has been the proliferation of artificial intelligence and machine learning tools. From text generators to full-depth fake video creators, the democratization of these technologies has accelerated their development and expanded their reach—thanks to more willing users and more databases available to train these machines.
As such, the potential for these tools has reached new levels, driving Big Tech companies to realign their resources in response to this trend. A significant example is IBM, which has paused hiring in anticipation of AI replacing once-human jobs. Reuters reported that CEO Arvind Krishna said IBM aims to automate 30% of its non-customer-facing positions in the next five years.
A Ripple Effect on Other Industries
While companies like Google, IBM, Microsoft, and Amazon are conducting mass layoffs, other industries have also experienced significant changes.
Take the financial sector, for example. Finance and tech are closely related; an event in one space will undoubtedly affect the other. With the demand in the tech sector sharply diminishing, fewer companies are looking to go public. As a result, this will create a backlash against investment banks.
One major hurdle amid the tech layoffs is the collapse of Silicon Valley Bank. Depositors rushing to withdraw their funds—primarily to keep their own enterprises afloat—quickly drained SVB and left it short on capital, as explained by the University of Washington School of Law.
Another sector worth looking into is healthcare, where pharmaceuticals and life sciences have also experienced their share of layoffs. Notable cases include Alphabet’s Verily and Amazon’s pharmacy unit.
More Industries Are Looking at Massive Job Cuts
With the effects of tech layoffs becoming more apparent, it’s worth examining other industries to contextualize this cyclic crash. More importantly, experts concur that the United States is teetering on the “precipice of a recession,” as stated by The Conference Board. This nonprofit business membership and research organization recently released its Job Loss Risk Index, identifying industries most at risk of job cuts.
Aside from those directly affected by the tech layoffs, even non-tech industries are at risk of job cuts with this impending recession.
Service industries such as construction, repair, personal services, transportation, and warehousing face higher risks. While these areas experienced growth during the pandemic-driven demands, the demand for these services is declining.
On the other hand, the report shows that the government, education, and healthcare sectors are least likely to suffer layoffs in the following months.
Future and Opportunities in IT and Tech
As counterintuitive as it may seem, many good opportunities remain in the tech and IT spaces. According to CNBC, American Staffing Association Chief Richard Wahlquist notes that technology positions continue to lead in hiring demands.
The main change, however, is the employer profile. Most demands for tech professionals come from small and medium-sized enterprises. Additionally, some affected employees started setting up their own businesses instead. The layoffs in the tech space have created a so-called revenge startup trend. Although the number of startups launched hasn’t increased significantly, the number of funding applications has, according to startup accelerator Y Combinator.
Still, it’s worth noting that most of the layoffs in Big Tech companies affect non-technical, non-client-facing positions, such as sales, marketing, and human resources.
Furthermore, it’s worth exploring other industries capitalizing on these layoffs to secure top-tier talent for their organizations. Healthcare, in particular, presents a promising landscape for individuals forced to leave the tech industry. As an industry, healthcare demonstrates resilience and performs well even in critical economic downturns.
While examining the healthcare sector, a Forbes article makes a compelling argument for Big Tech to look for greener pastures in the post-pandemic space. A key reason is the ever-present need for tech skills in advancing healthcare.
Make the Most Out of the Tech Employment Paradox
Big Tech companies have shed significant parts of their workforces, yet tech and IT professionals’ job market remains generally healthy. Since technology is ubiquitous in modern society, there will always be opportunities for people whose skill sets are essential in this rapidly changing world.
If the recent tech layoffs have made you uncertain about transitioning into a career in IT, Yellow Tech Tail can help. As a leading provider of EdTech Programs, we help people with little to no prior experience start a promising career in the IT industry. Book a 10-minute intro call with an Enrollment Advisor now!