Over the last three years (2022-24), around 3,500 tech companies have laid off 666,000 employees. The worst year so far was 2023, which accounted for 65% of all the tech layoffs (428,836 people). Unfortunately, 2024 hasn’t been the year we all hoped it to be, while layoffs have eased somewhat – 818 per day vs 1,175 (2023) – the rate is still too high to suggest we are nearing an end.  

Given the magnitude of these layoffs and the current economic conditions, the job market for tech workers looks a lot different from five years ago. Now, we are seeing that even the most employable workers, senior developers, are struggling to find work, and if they do land a job, they are taking a pay cut. If this is the experience for senior engineers, imagine what it’s like for a recruiter, a marketing professional, or a junior developer. 

So what happened? Was it COVID? Was it the economic downturn? Well, these reasons only explain a portion of the fall-out. In this article, we’ll have a look at the data to see what was happening in Big Tech that led to these massive layoffs. 

Who were most affected in the tech layoffs?  

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US vs Europe

Tech workers in the United States were most affected by the layoffs. According to a 365 DataScience report (2023), over 80% of the impacted individuals surveyed were based in the US. Crunchbase estimates that at least 315,000 workers have lost their jobs at U.S.-based tech companies since 2022. Based on these two estimates, tech workers in the US accounted for 50-80% of the total layoffs. 

The State of European Tech (2023) reported that layoffs from European-based companies accounted for around 10% of the global layoffs. Keep in mind that the EU tech scene is significantly smaller than the US. So while less people were let go in comparison, the workforce percentage was still considered high. From what’s reported on Layoffs.fyi, it can be seen that the majority of European tech companies laid off between 15%-30% of their workforce, this matches what we’ve seen from companies in the US. More people losing their jobs in the US but roughly the same percentage as those in EU tech.  

Companies

The companies that had the biggest layoffs, as of 2024, were Amazon (27,000), Meta (21,000), Google (12,000), Dell (12,650), and Microsoft (10,000). In Europe, the biggest layoffs were from Ericsson (8500), SAP (8,000), Flink (8,000), Philips (6,000), and Booking.com (4375). Flink is one of those food delivery companies that enjoyed overnight success during pandemic times, but has since taken a beating now that people are back to their normal routines. As is the case with other food delivery companies like Doordash, Delivery Hero, and Gorillas.  

Dell was the most recent tech company to announce layoffs (March 2024), this news comes almost a year after Dell’s first wave of tech layoffs. Despite the company’s soaring stock prices (up over 200% since 2023), Dell has reported negative quarterly revenue growth, and two years of fiscal downturn have forced management to cut even more jobs. IBM have also announced a strategy to replace upwards of 8,000 jobs with AI. 

Roles and departments 

Which roles/departments were most affected by the layoffs? According to the 365 DataScience report, the top five affected roles were HR & Talent Sourcing 27.8%, software engineers 22.1%, marketing 7.1%, customer service 4.6%, and Communications 4.4%. The HR & Recruiting cuts make sense – these are departments are generally the first to go when a company is experiencing troubles. Software engineering as the second-largest cohort is a shock, and that’s because, in tech, these are (supposedly) the people that are maintaining and building the core business asset. 

What’s even more alarming is that the average years of experience for these workers was 12 years. These were not junior or entry-level developers, but highly experienced and from some of the biggest and most innovative tech companies in the world. Unfortunately, there is no comprehensive breakdown of the type of software engineers that were most affected, but anecdotal evidence from engineering forums like r/layoffs suggest UX/UI researchers, DevOps, Data Science, technical writers, QA engineers, Product Management – these were the first to be let go. Any type of middle manager was at risk, and anyone not working with the core products. A lot of smaller product teams working on ‘expiremental’ products have been axed as companies streamline (see AWS store technology team as an example). 

Who was least affected by the layoffs?

It’s safe to say that the Executive level, who generally make hiring and firing decisions, were safe from the layoffs. Managers were not – Project Managers, Product Managers, and middle managers all took a hit. Individual contributors working on essential products of the business were considered safe. 

Fortune reported that cybersecurity roles were largely unaffected by the tech layoffs. This finding was based on a study from (ISC)². Even Amazon’s security chief says he would be ‘astonished’ if cybersecurity professionals are laid off due to AI. According to Bloomberg, IT managers, Information security analysts, web developers, and database administrators have the most job security in the tech sector. But Bloomberg doesn’t really provide any insight into how they arrived at this conclusion. 

The AI revolution of the past two years has boosted salaries and job security of Machine Learning and AI engineers. Right now, these roles might be some of the most future-proof roles in tech. 

Software engineers working in non-tech companies were affected significantly less than those in tech companies. Engineers at Fortune500 companies (excluding FAANG+) and other firms not in the tech sector (like healthcare or government) report a higher level of job security despite the state of the job market. This Reddit comment summarises the experience of a non-tech engineer: “Pay may not be big tech money, but life is pretty freaking awesome with not a single worry of layoffs.” 

While most tech companies have laid off employees, there are still a few big names that are holding out. NVIDIA is a company that seems to be going strong, while they did cut 500 jobs in 2022, they have avoided large-scale layoffs and continue to grow their headcount steadily. Snowflake, a cloud computing and data warehousing company, has outright avoided layoffs completely. Surprisingly, the company grew its headcount by 47% in 2023. Other data companies like Datadog and Dynatrace have also avoided layoffs and continue to hire tech workers. Garmin, Adobe, and Visa are also a few other big names that are still growing their headcount. 

What sparked the tech layoffs?

While tech companies have been laying off employees since 2020, that’s not really considered the beginning of the Tech Layoffs. The pandemic messed with a lot of tech companies that relied on some type of physical good or service. Skyscanner would be an example of this, they have an entirely digital product but without airline travel (a physical service), the business suffers. These where the tech companies that started laying off staff in 2020. 

On the other hand you have companies like Meta and Google with platforms that are completely online and self-contained in their own digital ecosystems. These companies did great in 2020 because their business wasn’t affected by any closures. The same can be said for payment processing companies, online retail, and food delivery companies (classed as essential workers). But this all takes a sharp turn at the end of 2022 as these companies started laying off their employees. This is considered the beggining of the tech layoffs. 

When Q3 earnings were reported at the end of October 2022, FAANG stocks took a plunge. Meta stock dropped 25% in a day – Meta’s lowest price since 2016. Within a week, Meta laid off 10,000 employees and put a freeze on hiring. Yet only a year prior to this event, tech stocks were at an all-time-high, and FAANG companies were reporting their highest earnings ever. So what happened?

What companies said about their layoffs

The main reason cited by big tech companies were lower than expected revenues based on changing economic conditions and hiring practices that had not accounted for a decline in earnings. Essentially, these companies had predicted their revenues would continue to grow at these record highs — which had been boosted by lockdown orders and government restrictions. 

You can read the company statements below – these are excerpts from Meta, Google, Microsoft, Amazon, Salesforce, Spotify, and Stripe.

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Tech stocks dropped 

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While many businesses suffered from the harsh government lockdown laws and stay at home orders, the tech sector (and largely FAANG+) enjoyed a very different experience. From the start of lockdown to the end, Meta stock grew 140%, Google stock rose 130%, Amazon 96%, Netflix 100%, Apple 200%. All of these companies were reporting record earnings, while brick and mortar companies were going out of business. 

In the figure above, you can see that November 2021 marks the beginning of a year-long downturn for tech stocks. So what was going on at this period of time? Lockdowns had come to an end, so there was a shift away from online activity. At the same time, the world eased into this economic downturn that had been artificially posponed by years of printing money. Increasing the money supply led to inflation and high interest rates and impacted business, consumer and investors spending. And at this point we see Big Tech revenue growth begin to drop. 

In 2022 revenue growth either comes to a halt or decreases for big tech. Google, Amazon, Microsoft and Netflix experience lower-than-average revenue growth (dropping each quarter) while Meta, and Apple hit red and start to experience revenue decline. The tipping point was the lower than expected Q3 earnings across the board, and this saw FAANG stock plummet overnight. The worse hit was Meta, their stock dropping 25% in a day after three quarters of missed earnings. Within days big tech companies started laying off staff. 

‘Mass’ hiring (2020-21)

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Annual growth rate of employees, MacroTrends

One of the main accusations against big tech was their supposed mass hiring during the pandemic. And these greedy hiring practices eventually led them to a place where they had to fire a bunch of people. This is one of the bigger reasons given for the layoffs. Let’s explore it there’s any weight to this explanation.  

While most companies were firing, Tech companies were hiring. In the table above you can see the headcount growth for Alphabet, Apple, Meta, and Amazon. You can clearly see that growth rates remained in the double-digit range (except for Apple) throughout the pandemic. In actual numbers: Amazon hired 800,000 new employees, Meta 27,000, Microsoft 58,000, and Alphabet 52,000. (Apple is really the exception here, they maintained a conservative approach to hiring, and largely avoided layoffs.)

It’s a fact that big tech were hiring tens of thousands of employees during the pandemic. But were they ‘mass hiring?’ In the case of Amazon, Salesforce, and Microsoft, yes, there were big hiring increases, particularly in 2022. NVIDIA also had a couple of big years. On the other hand we have Dell, Ericsson, and Phillips – these companies had big layoffs, but this wasn’t due to any mass hiring, actually the opposite, they have been cutting staff since 2021. 

Apple was the most conservative of the big five when it came to hiring, they kept headcount growth in the single digit range. Similarly, SAP did not experience any mass hiring years. Meta and Alphabet remained fairly steady until 2022, where there’s a slight increase. Without layoffs, Meta would have increased headcount by 26% and Alphabet when up 6% from 2021 to 2022. While these increases aren’t as major Amazon, the growth rate is still considered rapid. When you compare these numbers to more established firms like IBM or Cisco, it’s a world of difference. 

Revenue per employee 

Despite having a positive revenue growth and high stock prices, some companies have still decided to lay off employees. This is what we’ve seen happening in 2024. As an explanation for this behaviour, people have been pointing to something called revenue per employee. Apparently this metric is very important to investors. Essentially, an average revenue figure is calculated per employee (total revenue divided by number of employees). This figure should increase or at the very least stay constant. But when that figure starts to decrease, investors move from a buy to a sell position.  

Big tech headcount increased with slower than estimated revenue growth, driving revenue per employee down. The movement of the stock market seems to support this theory – the moment FAANG+ companies announced layoffs, stock prices began to rise (see stock graph above). Let’s take Meta, for example, they announce layoffs in November 2022 and three months later the stock is up over 100%. You can observe the same pattern for Google, Amazon, Dell, Salesforce, Spotify and Microsoft stocks – just to name a few.

At the very least, we can say that in reducing the headcount, these public companies won back investor confidence. And while these companies may have lost millions or billions of dollars towards severance packages and payouts (Google spent $2.1 billion on severance and other expenses), their loss is seemingly justified given stock performance. The layoffs don’t seem to be about cost-cutting, but about maximising revenue and stabilising the company stock. From a business perspective, it makes sense, from an employee perspective, it’s cold. 

Twitter gave Big Tech an opportunity

The layoffs at Twitter seemed to have been an opportune cover for some of these other big tech companies who were waiting for the right time to usher in job cuts. After Elon fires 3,700 Twitter staff a media frenzy ensures, and this goes on for weeks – there’s so much coverage of this event, that every other company announcement was treated like background noise. What most people don’t realise, is that within two weeks of the Twitter layoffs, Meta, Salesforce, Amazon and Cisco laid off over 26,000 tech workers. 

Of course, without insider knowledge, it’s hard to say whether Twitter was a catalyst – it’s an interesting idea, though. Regardless, there was still an observable domino effect that happened following Elon’s cut. Meta purged, Amazon followed and then Google – all within a couple of months. Whether Elon’s acquisition of Twitter was factored into the mix or not, it still provided cover.

Fake work

Earlier, we mentioned the employee growth rates at big tech companies. One thing that has been revealed in the course of these layoffs was company bloat. Keith Rabois, ex-PayPal, claims that Google and Meta were hiring thousands of people to do fake work either to satisfy hiring metrics or to keep talent off the market and away from competitors. This was further backed up by interviews with former Meta and Salesforce employees who suggested they were, “being hoarded like Pokémon cards.” Lots of former employees have since come out and expressed their frustration at being hired to do nothing. 

But this is not something that started in 2022, or in the pandemic, there have been indicators for a long time that these tech companies were experiencing bloat (and probably still are). We can take Twitter for example, who cut around 80% of their staff following Musk’s acquisition. Despite the sharp headcount reduction, the company is still performing well, all things considered. Users are at an all-time high (according to X data), and the team have managed to release a host of new features within a few short months. Subscriptions, creator ad share, edit feature, video streaming, view count have all been added to the platform (you can see a full list of changes here). The company is moving at a much faster pace compared to prerequisition times. 

It’s likely Meta and Google suffer from a similar issue. Does Meta really needs 80,000 employees? How many of those people are actually contributing to the success of the product(s)? Speaking to the New York Post an ex-Salesforce engineer suggested that, “20% of the employees at Salesforce did 80% of the work, while the others did on-site yoga and took long lunches.” He went on to add, “when the culture doesn’t let you tell people they’re underperforming, you end up with a team of slackers.” 

In every large company, you will find bloat and people doing ‘fake work’ – especially when the company has a business model that literally prints money, like Meta or Google. Is 4% or 20% reduction in workforce enough? Is that the level of bloat these tech companies are working with? If they think so, good, that means no more layoffs, but if not, there’s going to be more coming.

Why are layoffs still happening, and when will they stop?

So, if big tech have won back investor confidence and are profitable again, why do they continue to cut teams down? Well, it’s probably a combination of reasons. With this industry shakeup, companies have committed to streamlining and repositioning themselves. This could also be a response to the recession, where the strategy is usually one of defence, focusing back in on what the core business entails.

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We can also say with some certainty that generative AI can be partly blamed. More than 37% of business leaders say AI replaced workers in 2023. Big Tech have pivoted towards AI solutions in a big way, with plans to replace and automate jobs in the next few years – it’s already happening at Meta, IBM and Google. As LLMs get better we’ll only see more jobs being replaced, so while we might not see any mass layoffs, we’re likely to hear news of teams continually trimmed down. 

From an worker’s perspective, there’s really nothing positive about this whole situation. People have lost jobs, wages have been pushed down, job security is low, and job competition is now high. At the end of the day, the worker is left dealing with the repercussions of someone elses mistakes – in the same way that the tax burden is always passed on to the consumer. The main takeaway, if there’s anything to gleam from this mess, is that companies will put profits over their employees. So don’t get fooled by fancy offices or catered lunches.