Tech Layoffs Uncovered: The Reasons Behind the Job Cuts

Uzone.id – The technology sector is experiencing significant layoffs, with even some of the largest tech giants announcing workforce reductions. This wave of job cuts raises important questions about the underlying reasons driving these decisions.

As the world returns to pre-pandemic norms, growth has slowed, leading to overstaffing in many organizations. Additionally, rising inflation and economic uncertainty have prompted companies to reevaluate their financial strategies, resulting in cost-cutting measures that often include layoffs.

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Understanding the context behind these mass layoffs can shed light on the broader challenges facing the tech industry today and the future landscape of employment within it.

Inflation

Inflation or the phenomenon of aggressive interest rate hikes is increasing. This phenomenon has also caused increased costs for businesses, forcing companies to evaluate their operations. Many cases of layoffs occur for employees in technology companies that depend on advertising revenue because inflation can reduce expenses that have an impact on overall profits.

Artificial Intelligence

Increasing artificial intelligence has changed aspects of everyday life. The shift towards efficiency driven by artificial intelligence requires companies to rethink their workforce strategies.

Economic Slowdown

The fear of recession and the phenomenon of economic instability are the main things companies do when laying off employees. Because, if the economy experiences a slowdown or uncertainty, companies will take steps to reduce costs, one of which is by laying off employees.

Corporate Restructuring

The majority of companies are now restructuring their companies because they want to adjust the role of the workforce to the function of the job. Corporate restructuring can involve reducing the number of workers, changing job roles, modifying reporting relationships, and many others.

Reported from the official layoffs.fyi website, as many as 384 companies in the technology sector have laid off more than 124,000 employees in 2024. This number adds to the 428,449 technology employees who lost their jobs in previous years.

Some giant technology companies that have laid off employees include:

Google

Google (Alphabet) laid off 12,000 employees due to excessive expansion, and the impact of the COVID-19 pandemic. In addition, the shift in priorities to artificial intelligence-based products is also a factor in the layoffs.

Facebook

In 2023, Meta (Facebook) laid off more than 10,000 of its employees. The reason for the layoffs is a broader restructuring effort to focus on metaverse ambitions and address declining advertising revenues.

Amazon

In addition to Google and Facebook, Amazon also laid off more than 18,000 employees in early 2024. Most of the layoffs came from the retail and HR departments. The reason for the layoffs is that the company needs to streamline operations and focus more on long-term growth.

Microsoft

Microsoft as a multinational technology company also reduced its workforce by 10,000 employees. This is in response to dunia economic uncertainty and the shift to cloud computing and artificial intelligence services.

Intel

In August 2024, Intel laid off 15 percent of its employees, or around 15,000 employees globally. This phenomenon occurred because the company experienced poor corporate finances in the second quarter of 2024.

Cisco Systems

Technology giant Cisco Systems then followed suit, shocking the market with news of layoffs of 7 percent in August, or around 5,600 employees. The company has also laid off 4,000 employees in February 2024.

Employees who are laid off are entitled to the rights of Indonesian labor law. The rights of employees during termination of employment include:

1. Severance pay, paid by the company to employees depending on the remaining contract period in effect.
2. Long service award, paid by the company to employees as an appreciation for their length of service at the company.
3. Replacement money, paid by the company to employees as compensation for rights not received by employees due to termination of employment.

The occurrence of a wave of layoffs, especially in the technology sector, reflects the major challenges faced by this industry in dealing with market changes and dunia economic conditions.

In the future, the government is expected to pay more attention to this case of termination of employment. This phenomenon can have an impact on the high number of unemployed in the country, which is in line with increasing cases of crime, poverty, lack of national income and productivity, and many other negative impacts.