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by Emma Mitchell on June 16, 2022

Tech industry is experiencing massive layoffs

The global inflation forces tech companies to change their employment policies. High inflation could result in a recession. At this point it’s difficult to say whether tech companies are expecting recession or are already experiencing decrease in sales. As a rule, companies always hope for the best and prepare for the worst. Tech industry is more susceptible to the risks of recession than other industries, such as food, pharmaceutical, etc. It’s worth mentioning that most sectors are experiencing layoffs at some degree. Layoffs can help companies save funds. However, massive global layoffs can contribute to decrease in consumer spending and increase recession.  As of today, most indices are bearish in the stock market. It’s easy to have bad expectations about the future of the economy nowadays. When people are expecting the worst, they tend to spend less and companies have no choice but to cut their spending.

Layoffs and retrenchments around the globe

In the USA alone, more than 35 000 employees have experienced retrenchments in the last 6 months. Big American tech companies have also decreased the number of their workforce. The names include Tesla, Netflix, Coin base, Peloton and PayPal. Tesla CEO Elon Musk has mentioned that he was considering cutting 10% of Tesla’s employees to counter fears of upcoming recession.

International tech companies are shedding stuff in various countries at the same time. For instance, Shopee, global e-commerce tech company has cut workforce in Argentina, Chile and Mexico. In addition, Shopee pulled out from India, France and Spain.

Lots of people have lost their jobs in the crypto industry, following the strong bear market. Crypto.com laid off 5% of it’s workforce.

Digital wealth management platform StashAway cut 31 employees. The company’s spokesman has mentioned that fight on inflation brings fear of recession and the situation is not unique to StashAway. The spokesman has the point. In general, to fight inflation, central banks limit money supply by increasing interest rates, which translates into less money in the consumers’ pockets and less spending on tech products.

The good and bad layoffs

Trimming a workforce during the good times is beneficial for companies. Managers start looking for a deadwood to cut down and let new trees grow. Cutting workforce can save a lot of resources. Retrenchments due to recession creates unpredictable environment. During the hard times, companies are forced to fire people, even when the employees are doing a great job. The latest pandemic has showed that many people changed their professions or refused to go to work after the restrictions were lifted. Finding and training new employees might be a challenge for many companies when the economic conditions improve.

By Emma Mitchell

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