Several factors contribute to these layoffs, including economic slowdown, decreased demand for IT products and services, and, most significantly, the rise of AI.Recently, tech MNCs have been laying off quite often despite their decent turnovers. For example, Apple recently announced its financial results of its fiscal 2024 third quarter that ended on June 29. According to the Apple Newsroom, the company has posted quarterly earnings of $85.8 billion, up by 5 percent year on year. Similarly, according to the IBM Newsroom, the company’s second quarter showed a revenue of $15.8 billion, up by 2 per cent, since the last quarter. According to a CISCO report on fourth quarter and fiscal year 2024 earnings, the company earned a revenue of $13.6 billion while Intel’s report on second quarter 2024 financial results indicated a revenue of $12.8 billion.
A TNN report suggests that Intel has announced a 15,000-employee layoff as part of a $10 billion cost-saving plan. The report further mentioned that Apple also let go of 100 employees in its services division to refocus on AI while Cisco is cutting 6,000 jobs in its second major layoff, also pivoting towards AI and cybersecurity. Meanwhile, IBM’s closure of its R&D division in China resulted in over 1,000 job losses.
However, this isn’t the first wave of massive tech layoff in 2024. According to another TNN report, Google started the year by laying off several hundred employees (both in the US and globally). Around the same time, Amazon announced job cuts in its Prime Video department, affecting hundreds of positions. So, why are these tech giants resorting to layoffs despite their massive turnovers?
The Layoff wave: What are the driving factors?
As already mentioned, the recent wave of tech layoffs has sparked concerns about job security among IT professionals. But what is driving this surge in layoffs? Here are three key factors behind thi large-scale job cuts.
Rising inflation and interest rates: According to Forbes, the US Federal Reserve’s 2022 interest rate hike aimed to curb the highest inflation rates in 40 years. However, these actions have had far-reaching intended and unintended consequences. While inflation is beginning to stabilize, the cost of borrowing and servicing debt has skyrocketed. How does this impact major companies? IT giants, which thrived during times of near-zero interest rates and abundant capital, are now facing steep borrowing costs. As a result, they are cutting back on growth investments and hiring, diverting hard-earned cash to cover their debt obligations. This has triggered significant cost-cutting measures, leading to inevitable layoffs across the tech sector.
The fear of recession: According to The Economic Times, the US economy appears to be teetering on the brink of a recession. If the situation doesn’t improve by the end of the year, the economic outlook may darken further. Several factors contribute to this uncertainty, including the struggling US housing market and the upcoming presidential election. Some economists and pollsters believe the instability surrounding the election could tip the economy into recession. Additionally, the lingering effects of the COVID-19 pandemic have prompted companies to tighten their belts. For tech giants, where profitability per employee is critical, layoffs have become a necessary cost-cutting strategy to stay afloat.
The coming of AI: Artificial intelligence is reshaping the tech landscape, creating both opportunities and challenges. While AI holds the promise of new job creation and improved productivity, it also threatens those unable to adapt. IBM’s decision to cut more than 3,000 jobs in its marketing and communications divisions while freezing hires for roles that could be replaced by AI is a prime example of this trend. As companies pivot toward AI-driven efficiency, they are rethinking their workforce strategies. According to the Economic Report of the President, approximately 10% of US jobs are at risk of AI disruption. In 2022, the US tech sector employed around 9.16 million workers, meaning roughly 916,000 jobs could potentially be lost to AI.
How can you safeguard your job?
While job security might not be entirely in your hands, there are proactive steps you can take to ensure that your contribution stands out in your company. In today’s competitive landscape, upskilling is no longer optional—it’s a necessity. IT professionals must evolve or risk being left behind.
Stay relevant: To stay ahead, IT professionals must dedicate time to mastering advanced technologies like AI, data science, and cloud computing. Keeping up with industry trends not only makes you more efficient but also ensures you’re prepared for evolving in-demand roles. By staying relevant, employees can better navigate these industry changes.
Expand your career horizons: In today’s tech world, companies value employees who can wear multiple hats. By upskilling, IT professionals can unlock new career opportunities, allowing them to contribute across various functions. This versatility makes employees more valuable to the company and reduces their likelihood of being considered for layoffs.
Why upskilling is critical: Companies are increasingly prioritizing employees who can contribute to future-focused initiatives. Upskilling in areas like AI, data science, and cloud technologies gives employees a competitive edge, making them indispensable when companies decide who stays and who goes. Moreover, it bridges the skill gap, preparing IT professionals for high-growth sectors and ensuring they remain crucial to the company’s long-term success.