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Is there something wrong?
According to some news sources, Tech-Giants like Amazon, Google, Meta, and Microsoft are planning to lay off thousands of employees in their latest round of employee management strategy. Other giants are planning monthly additional job cuts.
These giants have paused new hirings. The reason being cited is the current ongoing wave of covid pandemic-related economic uncertainty, overflowing operation costs, and inflation.
This is the story of the global job market where uncertainties are aggravating. Since the advent of Covid, the job market has suffered a lot.
The pandemic has generated multi-frontal impacts on the job market, severely affecting foremen-level jobs. The business management strategy is not new as many giants have taken a step in this direction amidst the rising inflation rate and tightening the monetary stance of central banks to tame it.
Lockdown Effect
However, with the advent of the covid crisis, the cracks in the job market have widened. The pandemic-led lockdown engendered a peculiar situation where on one side companies with brick-and-mortar operations were slashing employees while companies with online presence experience a manifold increase in their operations and revenue.
Google and Amazon enjoyed the edge of their online presence and opted for urgent hiring of tech giants to leverage and then tame the ongoing opportunity into their favors. Also, the supply-demand mismatch provoked many companies to hire employees on an urgent basis to meet the current needs.
The giants like Infosys and Accenture compelled their employees to sign retention contracts to avoid frequent job switching by employees. This indicated the inflated tech bubble. Now experts are predicting that this tech bubble is soon going to burst.
Why Firing Employees?
Why these companies are taking a u-turn in their employment policies?
The following are some probable reasons:
With disturbed supply chains, demand-supply mismatch, and shrinking disposable income, inflation, and high-interest rates are hitting hard on these giants.
To save their operational costs and compensate for their weak revenues, these tech giants are planning to lay off their techies. The year 2022 has been declared as the year of retrenchment for tech employees globally. Now that life has regained the pre-pandemic rhythm, the online boom in the tech industry has slowed down.
According to various Business schools, For the last few years, companies were refraining to judge the work performance of their employees due to all remote environments. However, with the comeback of work from the office environment top executives are considering performance appraisals and restructuring in their organizations.
Stocks Situation
With the prevailing economic uncertainties, companies are trying to focus more on core strengths rather than expansions. The rate of investments in the tech market is low. The tech-IPO market is hitting the bottom rock since the 2008 crisis.
Apple and Amazon lost $830 Billion in the capital in 2022. The stocks of major tech giants are riding on downward trajectories.
Also, these mass layoffs are the result of imitation, simply because the tech industry works on social contagion. Since the episode of Elon musk firing half of the tech army of Twitter, slashing jobs has gained currency in tech sectors. As a result, even small tech companies are adopting lay-off policies in suspicion of something fishy is going to happen
For Google, Ad-revenue forms a lion’s share. However, these companies are now facing resistance from governments against their intrusive advertisement policies and their effort to escape from taxation for revenue generated in the country of operation.
According to some studies, the current layoff rate will exceed the previous rates due to ongoing economic and geopolitical uncertainties. Even small techno firms are adopting the same stance.
These sudden elimination are not just shocking but are also indicators of upcoming tragic events. Techies are already worried about their future.
Future
Some experts are predicting that severe depression is on the anvil. The nature of the job market has been very complex since its inception. However, all countries face some common problems like Demand -the supply gap, the concentration of jobs in a few sectors and geographical areas, skills deficits, and gender gaps. On top of it, the uncertain and sudden slashing of employees further compounds the complexity.
The recent tech employee elimination is going to hit complex nations like India and China which are the top supplier of techies to these giants. Countries like India and China together harbor almost half of the world’s population. With relatively lower employee costs in this nation, techies and outsourcers prefer this nation for accomplishing their operational tasks.
However, the recent cuts are going to severely affects these techies, their families, and most importantly the service sectors of these nations, which is the driver of their economic growth. This is also worrisome news for the governments of these countries especially India which is struggling with post covid impact on the labor market.
According to CME data, India faces an uphill task of managing an unemployment rate of 10% given its population size and social inequality issues. The recent overseas job cuts and rising inflation is going to hit hard to this budding economy.
Conclusion
The job cut in one sector will create a domino effect especially when operations have become global and the world is becoming a global village. The present situation presents a complex challenge for a budding tech startup in a developing nation that is the propelling engines of growth and employment in these nations.
This move has already ignited panic situation among the breadwinners and the owners of startups. Many experts are predicting upcoming economic uncertainties in form of a plunging stock market and controlled demands. This can even hurt hardly the progress achieved by the global economy from pandemic-led socio-economic wounds.
Now it is just waiting and watching the scenario where we as the audience can only predict the upcoming events and growth trajectories. Things might get worse or can become better, however, one thing is certain, in this economic game the losers will be the workforce of these organizations who work from dawn to dusk to make these giants shine bright in the market.