Amazon, Microsoft, Google, Salesforce, and SAP are among over 90 tech companies that have collectively laid off over 25,000 workers so far in 2024, according to Layoffs.fyi, a website that tracks such data.
The recent wave of layoffs across the industry reflects the fact that many tech CFOs have sharpened their focus on ensuring long-term profitability in an uncertain economy — a trend that is unlikely to go away anytime soon, analysts told CFO Dive.
“This is not a first-quarter phenomenon,” said Giuseppe Gasparro, a partner & managing director at New York-based consulting firm AlixPartners. “It’s something that we believe is here to stay for at least the rest of 2024, and maybe well into 2025.”
In a recent BDO survey, 40% of tech CFOs said they were planning to conduct layoffs in 2024, although just 14% said they expected to reduce overall headcount.
“We have data suggesting that some areas within these organizations are going to increase, so we think this might be a situation where they’re just trying to shift toward being more efficient in their operations,” said Hank Galligan, BDO’s national technology practice leader.
Factors such as high interest rates, slowing customer demand and over-hiring during the COVID-19 pandemic have combined into a “perfect storm” that is now forcing technology-industry executives to adopt a more structured, long-term approach to ensuring profitability, according to a report released by AlixPartners last August.
“Unfortunately, we fear this storm isn’t over yet,” the report said. “The macro environment hasn’t turned and likely won’t for some time. Interest rates continue to pressure valuations and limit access to capital.”
Earlier this month, Google announced that it was shedding hundreds of jobs in its hardware, voice assistance and engineering teams as part of cost-cutting measures. The tech giant said in a statement that it was “responsibly investing in our company’s biggest priorities and the significant opportunities ahead,” as reported by the Associated Press.
Meanwhile, many of the same big tech companies that are laying off employees are doing so as they invest billions of dollars into artificial intelligence.
“They’re getting rid of skills sets that really don’t have a place in their forward operating plan and investing more in the skill sets required to stay competitive in the future,” Forrester analyst Christopher Gilchrist said.