Several factors contribute to these layoffs, including the economic slowdown, reduced demand for IT products and services, and most importantly, the rise of AI. Of late, tech MNCs have been laying off employees quite frequently despite their good turnover. For instance, Apple recently announced its fiscal year 2024 third quarter financial results that ended on June 29. According to the Apple Newsroom, the company has posted quarterly earnings of $85.8 billion, up 5 percent year over year. Similarly, according to the IBM Newsroom, the company’s second quarter showed revenue of $15.8 billion, up 2 percent from the previous quarter. According to CISCO’s report on fourth quarter and fiscal year 2024 earnings, the company posted revenue of $13.6 billion, while Intel’s report on second quarter 2024 financial results showed revenue of $12.8 billion.
A report by TNN suggests that Intel has announced layoffs of 15,000 employees as part of a $10 billion cost-saving plan. The report further states that Apple has also laid off 100 employees in its services division to refocus on AI, while Cisco is cutting 6,000 jobs in its second major layoff, also focusing on AI and cybersecurity. Meanwhile, IBM’s shutdown of its R&D division in China resulted in the loss of over 1,000 jobs.
However, this is not the first wave of massive tech layoffs in 2024. According to another report by TNN, Google started the year by laying off several hundred employees (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 such massive turnover?
Wave of layoffs: What are the factors behind it?
As already reported, the recent wave of layoffs of tech workers has raised concerns about job security among IT professionals. But what is causing this surge in layoffs? There are three main factors behind the massive job cuts.
Rising Inflation and Interest Rates: According to Forbes, the US Federal Reserve’s 2022 interest rate hike is aimed at curbing the highest inflation rates in 40 years. However, these actions have had far-reaching intended and unintended consequences. While inflation has begun to stabilize, the cost of borrowing and servicing debt is skyrocketing. What impact does this have on major companies? IT giants, which thrived in a time of near-zero interest rates and abundant capital, are now facing huge borrowing costs. As a result, they are cutting back on growth investments and hiring, diverting hard-earned cash to meet their debt obligations. This has triggered significant cost-cutting measures, leading to inevitable layoffs in the tech sector.
Fear of recession: According to the Economic Times, the US economy appears to be teetering on the brink of recession. If the situation doesn’t improve by the end of the year, the economic outlook could get even bleaker. Several factors contribute to this uncertainty, including the struggling US housing market and the upcoming presidential election. Some economists and surveyors believe that the volatility surrounding the election could tip the economy into a recession. Additionally, the long-lasting effects of the COVID-19 pandemic have prompted companies to tighten their belts. For tech giants, where profitability per employee is crucial, layoffs have become a necessary cost-cutting strategy to stay afloat.
Advent of AI: Artificial intelligence is reshaping the technological landscape, creating both opportunities and challenges. While AI promises new job creation and improved productivity, it also poses threats to those unable to adapt. IBM’s decision to cut more than 3,000 jobs in its marketing and communications divisions while pausing hiring for roles that could be replaced by AI is a prime example of this trend. As companies move towards AI-driven efficiency, they are rethinking their workforce strategies. economic report of the presidentNearly 10% of US jobs are at risk of AI disruption. In 2022, the US tech sector employed about 9.16 million workers, meaning about 916,000 jobs could potentially be lost due to AI.
How can you protect your job?
While job security may not be entirely in your hands, you can take proactive steps to ensure that your contributions to your company stand out. 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 such as AI, data science, and cloud computing. Keeping up with industry trends not only makes you more efficient but also ensures you are prepared for in-demand roles. By staying relevant, employees can better navigate these industry changes.
Expand your career horizons: In today’s technological world, companies value employees who can perform multiple roles. By upskilling, IT professionals can open up new career opportunities, giving them the chance to contribute to a variety of functions. This versatility makes employees more valuable to the company and reduces the likelihood of being considered for layoffs.
Why skill upgradation is important: Companies are prioritizing employees who can contribute to future-focused initiatives. Upskilling in areas such as AI, data science, and cloud technology gives employees a competitive edge, making them indispensable when companies decide who stays and who goes. Moreover, it bridges the skills gap, preparing IT professionals for high-growth areas and ensuring they remain critical to the company’s long-term success.
