Layoffs in tech companies are on a spike like never before. Just four months down the year, and according to Layoffs.fyi, over 630 companies have already carried out more than 185,000 layoffs in 2023 globally. Not just that, there's even a decline of 66% in the hiring rate in FY23 in comparison with the previous year. While this looks bad, experts predict that the worst is yet to come as this layoff season shows no sign of ending. Talking of layoffs in India, India ranks second in the world with a count of more than 35000 tech layoffs so far.
In this article, we will cover some of the recent layoffs along with the major reasons governing these mass layoffs in India and worldwide.
Recent Layoffs in India and Worldwide: Quick Overview
Tech giants like Meta, Amazon, Microsoft, Indeed and Google have reduced their workforce significantly over the last few months. In India, many startups like Byju's, Vedantu, Meesho, Dunzo, GitHub, Oyo, and Ola also announced job layoffs recently. In case you missed it, here are some recent reports of job layoffs in India that have surfaced recently.
Indian ed-tech startup industry has seen the most number of layoffs in 2023, with around 19 ed-tech giants laying off around 9400 staff. Edtech unicorn Byju's led the motion with around 2500+ layoffs which accounted for 5% of its total workforce. Byju's layoffs were an attempt to restructure the organisation.
Recently SoftBank, YC, Sequoia India and Meta backed E-commerce startup Meesho also laid off 15% of their workforce (251 roles). CEO Vidit Aatrey also acknowledges that the company made incorrect judgments around hiring and is now adjusting as per their new plans of keeping a leaner organisation structure.
Google-backed Sharechat announced on Jan 16, 2023, that it has laid off around 20% of its staff in an attempt to restructure and prepare itself for the upcoming market conditions. As per the expectation of the news reports, 99% of its Indian staff base was impacted by this layoff.
OYO, a Softbank-backed Indian Hotel Aggregator platform, announced a cut of 600 employees from its 3700 people workforce around the end of 2022. The company decided to have this 16% reduction in its workforce to restructure itself as it plans to go public in the Indian market in 2023.
Mark Zuckerberg's Meta announced around 10,000 layoffs last month in its second layoff round, before which it sacked over 11,000 employees in 2022. This has reduced Meta's workforce by around 25% and brought the count to 66,000. The company stated restructuring and profitability as the main reasons for the turnaround.
Major Reasons for Layoffs in India
Various factors like changing industry dynamics, the impact of COVID, economic uncertainty, geopolitical tensions and more have contributed to the layoffs in India. Some of the reasons which have led to an increment in the toll of layoffs in India are:
1. Uncertain Macroeconomic Conditions
Macroeconomics refers to the performance of the overall economy - how the markets, consumers, businesses and the government function. It is important from the point-of-view of business management as uncertainty in the same leads to tough decision-making like reducing the workforce and adopting a more sustainable approach. Hence amid these uncertain global macroeconomic conditions, many companies are preparing themselves in advance by taking cost-cutting measures.
2. Increasing Inflation
Inflation has impacted almost every industry, and now it is the turn of the IT sector. The continuous increase in inflation rates on a global level is affecting the tech industry as well. Due to inflation, it is getting difficult for companies to bear their operational costs - salary, rent, bills, etc. As a result of which, most of them have started sacking their employees.
3. Funding Winter & Over-Hiring
Indian startups have seen a serious decline in their funding compared to last year. And this is probably one of the major reasons for startup layoffs in India. Indian startups had a great 2021 in terms of funding. Sectors like Ed-tech saw a massive boom in demand. This led to an increase in the workforce as a pre-preparing measure to fulfill the demand.
However, considering the current market situation and a decrease in demand, the situation is completely different. Now, when conditions are against, companies are resorting to layoffs to cope with this funding winter.
4. Focus on Profitability
Profitability is an important factor for a company's growth as it shows a sustainable business model.
As per Rajeev Suri (Orios Ventures Partners) - the year 2022 was all about chasing growth, where investors took risky bets, and startups burned more cash.
However, now public market dynamics have changed, and many companies are struggling to make profits due to recessionary conditions. Therefore, they are reducing their workforce to cut down on their expenses and focus on profitability.
Layoffs in India & worldwide are inhibiting not just the growth of the employee and the employer but also a nation's economy. And with increasing global economic tension and the introduction of technologies like Artificial Intelligence and Machine Learning (AI & ML), the situation is expected to continue for a while.
To help you in these challenging times, Reczee has also built a Tech Layoff Tracker 2023. Both candidates and companies can explore new opportunities and get pre-verified tech candidates. In the last few months, the tracker has helped multiple candidates and companies, and we hope this will be helpful for you as well. If you were impacted by a layoff recently, drop your profile on the above link, and we will get back to you with relevant opportunities as soon as possible.