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Mass exodus at tech firms after boom time

It has been a tough six months for workers at the world’s big technology companies.

Most recently, Amazon fired 9000 workers across the globe.

The notoriously boom and bust sector has seen mass job losses in 2023 after expanding during COVID-19, with Apple, Google and Microsoft also losing tens of thousands of workers to reduce costs.

According to layoffs.fyi, an online portal which has tracked tech sector job losses this year, over 515 tech companies have axed more than 150,000 workers in the past three months.

Melbourne-based Mr Yum fired 40 workers earlier this year, and Wesfarmers owned Catch.com.au reduced its workforce by 100 people.

Amazon has laid off 27,000 workers in total; Facebook has fired 21,000 people; Microsoft has reduced its workforce by 10,000; and Twitter by about 5000.

Experts say the sharp swings and roundabouts in the global economy throughout and after the COVID-19 pandemic are behind the shift in fortunes for tech giants, with the waves of redundancies coming after a hiring bonanza from major companies as they cashed in on lockdowns.

“The impact of tightening monetary policy is far-reaching and the tech sector has been heavily hit,” said RMIT University associate professor Angel Zhong.

COVID bonanza

The tech layoffs we’ve seen in 2023 aren’t that surprising, Dr Zhong said.

After all, the tech sector had invested billions of dollars in expansion during the COVID-19 pandemic, when large sections of the world were locked at home spending time on screens.

All that demand drove a gold rush for tech companies – and they needed tens of thousands of new workers.

Dr Zhong said there was “investor hype” in tech companies during COVID that drove optimism.

“This was also associated with the ultra-low rate environment of those years, which made it easy for tech start-ups and tech firms to borrow and issue shares,” she said.

“With a large amount of easy money flowing around, tech companies hired more than they needed for business growth.”

Economy sours

But the boom was never going to last, and as COVID abated and people started moving around again demand for tech services and products returned to normal.

Craig Erlam, a senior market analyst with OANDA, says tech giants like Google, Apple and Amazon all had disappointing earnings results in February, leading to recent mass job losses.

“Each had their own reasons for disappointing the street, but ultimately the one thing they all have in common is the economy and the outlook, and it’s hitting both the top and bottom lines,” he said.

“Whether that’s through fewer device purchases or lower spending on the cloud and advertising, the trend is extremely clear for all to see.”

Making matters worse, Dr Zhong said, was soaring inflation and the rising interest rates designed to combat it have only tightened the screws further for tech firms and their workers.

“Interest rate hikes make it more expensive for tech firms to source funding to support business operations. Rising inflation also increases labour costs and other costs,” Dr Zhong said.

“In the short run, with recent banking turmoil and turbulence in market confidence, there will be a bumpy road ahead in the job market … of the tech sector.”

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