It’s hard to go online without reading about tech layoffs: a thousand cuts here, mass reductions there. But the reason behind these headlines is more complicated than you might think.
Unlike traditional employees, whose labor is directly tied to the daily revenue a company generates, tech workers are often tasked with building products that aim for future returns. This means that laying off a tech worker won’t immediately affect the bottom line because the value of their work has already congealed into codebases and product architecture.
In fact, most of the companies that have conducted layoffs are in a healthy financial position. They overestimated the demand for their digital services in the early days of the pandemic, and now have to rebalance staffing as consumer behavior has shifted out of pandemic mode. The layoffs also allow these organizations to focus on new technologies and innovation.
The other big reason for layoffs is that investors are pressuring technology giants to tighten their belts. With signs of a recession on the horizon, investors are calling on companies to cut costs and focus on efficiency. The result is that many tech companies have started slashing headcount, but are still committing billions to AI and automation.
This trend will likely continue into 2023 and beyond. The good news for small business owners is that this decrease in big tech workforces will create opportunities. As these companies reduce their overhead, they’ll need less marketing support from small businesses. As a result, small businesses will have a unique opportunity to increase their presence on platforms like TikTok, Facebook, Instagram, and LinkedIn.