It's not just in Silicon Valley that memories of the bursting of the dot-com bubble in March 2000 are increasingly coming back. In the first two and a half months of 2024 alone, 209 tech companies had laid off 50,312 employees by the weekend, according to the Layoffs.fyi portal, which automates job cuts in the IT industry since the corona pandemic and the subsequent wave of layoffs Followed media reports. The numbers for the beginning of 2023 were even higher. But overall, the trend from the previous year will continue in 2024. Layoffs counted a total of over 260,000 fired employees in around 1,200 IT companies for 2023. Companies such as Alphabet with Google and YouTube, Amazon, Meta (Facebook and Instagram) and Microsoft have all taken part in downsizing this year. The same applies to eBay, PayPal, Unity Software, SAP and Cisco.
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Challenging qualification requirements and lower pay
All told, 2023 was the second-biggest year of tech sector cuts on record, according to job placement firm Challenger, Gray & Christmas. The only time there were more layoffs was in 2001, given the aftermath of the dot-com crash. Since the spectacular bankruptcies of eToys, Pets.com, Webvan & Co., not so many employees in IT and Internet companies have lost their jobs in such a short time. Job cuts last month were expected to be the highest in February since 2009, according to labor brokers' estimates, when the global financial crisis sent the economy into austerity mode.
At the same time, the search for new professional challenges is not getting any easier for many of those who have been fired. The US broadcaster CNBC spoke to several people affected and industry insiders. Overall, these paint a picture of an increasingly competitive market with job offers that contain demanding qualification requirements and are accompanied by lower pay than in previous positions. The situation is particularly confusing for software developers and data scientists: just a few years ago, their skills were among the most highly valued in the world. Now they have to think about leaving their industry and their field of work in order to find a job at all.
Artificial intelligence as a double-edged sword
“The market is not what it used to be,” Roger Lee, founder of Layoffs.fyi, told CNBC. “To secure a new position, many salespeople and recruiters are leaving the tech industry entirely. Even engineers are making compromises – accepting roles with less stability, a more difficult work environment, or lower wages and benefits.” Salaries in the tech sector have “largely stagnated” over the past two years, while the general job market in the USA is developing quite positively. Artificial intelligence (AI), which is held responsible for unemployed developers in view of programming chatbots like ChatGPT, is a double-edged sword. Because technology is also a driver for a return to rapid hiring and expansion. Salaries for AI engineers bucked the trend.
According to the report, Amit Mittal can sing a song about the ups and downs. In November, the Indian native was fired from AI-driven lending firm Upstart, where he worked as a software engineering manager. There he was already seeing that the hiring process was becoming significantly more demanding as the hire-and-fire mentality increased. After leaving his job, he was forced to apply for a tourist visa in addition to his work visa, which cost around $8,000 in legal and administrative costs. In the meantime, he has unsuccessfully applied for around 110 jobs, according to CNBC. Apparently employers are currently very cautious towards visa holders.
(bme)