Technology in 2024—Record Profits and Massive Layoffs

2023 devastated Silicon Valley tech workers—representing the worst 12 months since the dot.com crash two decades ago. Reasons cited for layoffs in 2023 included over-hiring during the pandemic, rising inflation, and lower consumer demand.

Now, however, big tech and media companies are starting 2024 with more layoffs, including:

• Amazon’s Buy with Prime to lay off less than 5% of its employees, its audiobooks and podcast division to lay off 5% of its workforce, while its streaming and studio operations will lay off several hundred 
• Alphabet’s X Lab, responsible for developing new technology, will lay off dozens. The Google segment of Alphabet is laying off hundreds in advertising sales and hundreds across such teams as hardware and augmented reality
• Salesforce plans to let 700 employees go, approximately 1% of its global workforce
• Microsoft will lay off 900 employees at Activision Blizzard and Xbox
• Business Insider will shed 8% of its staff
• Autonomous vehicle technology company Aurora Innovation has cut 3% of its staff
• eBay will cut about 1,000 roles, around 9% of its current workforce
• Unity Software plans to cut  25% of its workforce, approximately 1,800 jobs
• While IBM will cut some employees in 2024, it will hire more for AI-centered roles

Although workforces have returned to pre-pandemic levels, inflation is half compared with this time last year, and consumer confidence is rebounding, 100 tech companies have collectively let go of about 25,000 employees, according to layoffs.fyi, which tracks the technology sector. The companies are cash rich. So, why the layoffs?

According to Jeff Shulman, a professor at the University of Washington’s Foster School of Business, “The layoffs seem to be helping their stock prices, so these companies see no reason to stop.”

Shulman said, “They’re getting away with it because everybody is doing it. And they’re getting away with it because now it’s the new normal. Workers are more comfortable with it, stock investors are appreciating it, and so I think we’ll see it continue for some time.”

“It’s kind of a self-fulfilling prophecy in some sense,” Shulman added. “They panicked and did the big layoffs last year, and the market reacted favorably, and now they continue to cut to weather a storm that hasn’t fully come yet.”