Microsoft and other tech companies have fired 50K people in 2023 and we are just 25 days into January

We are just three weeks into January and the layoffs of employees from tech companies are touching new records. These layoffs are affecting thousands of workers.

These big companies have cited economic uncertainty and fears of a recession as the reasons for the job cuts. The layoffs in 2023 come after two very tough years during the Covid-19 pandemic and the job cuts that followed around the world in 2022.

Silicon Valley's big tech companies like Google, Microsoft, Amazon, Meta, Twitter, Cisco, and others have collectively laid off over 1,00,000 employees in the past few months and many believe more layoffs are yet to come.

Layoffs in 2023: Over 50,000 people have been fired by these companies in 2023 alone.

Microsoft: The software company said it will cut about 10,000 jobs, almost 5% of its workforce.

Google: Google became the most recent in the industry to announce layoffs, saying 12,000 workers, or about 6% of its workforce would leave them.

Spotify: The music streaming service is cutting 6% of its global workforce.

Amazon: The e-commerce company said it is cutting almost 18,000 positions.

Salesforce: The company has laid off 10% of its workforce, about 8,000 employees.

Coinbase: The cryptocurrency trading platform has cut approximately 20% of its workforce or about 950 jobs.

Why are tech companies firing employees? The tech companies that went on a hiring spree during the pandemic due to the demand for their products are now heavily downsizing. We look at some of the reasons:

Over-hiring during Covid: As most people were working from home during Covid, the tech products and services were in high demand. The tech products also needed a lot of evolvement which led to these companies going on a hiring spree. But now that most people are back to work from office, these companies, in order to still be profitable, are letting employees go.

Sundar Pichai pointed out this in the letter he sent to employees after announcing the termination of 12,000 people. "Over the past two years we've seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today," he wrote.

Fears of recession: The fear of recession is real and the situation has gotten worse in the past year. Russia's invasion of Ukraine, slowing growth rates, rising interest rates, and an increase in the prices of essential commodities have led to companies believing recession is near, if it has not hit us already, especially in Europe.

In the letter to employees after the announcement of layoffs, Satya Nadela said: "We're also seeing organisations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one."

Copycat behaviour? Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business says that the workforce reductions that are happening across the tech industry are a result mostly of "social contagion".

"Behavior spreads through a network as companies almost mindlessly copy what others are doing. When a few firms fire staff, others will probably follow suit," he said.

"Could there be a tech recession? Yes. Was there a bubble in valuations? Absolutely. Did Meta overhire? Probably. But is that why they are laying people off? Of course not. Meta has plenty of money. These companies are all making money. They are doing it because other companies are doing it," Pfeffer said to Stanford News.