The technological sector lives gray days. So far this year, we have seen a massive wave of layoffs that already number 60,000 across the industry. Google announced the departure of 12,000 employees, Twitter sent 83% of its employees to the streets in Spain and more recently Spotify announced that it will do without 600 workers. It is a global phenomenon that affects dozens of large companies in the sector. Today we have learned that the last to join the trend has been IBM.
The technology company will lay off 3,900 employees at once. And there are several reasons that attend to this decision.
The situation of the company. Both its revenue growth and cash generation are above the forecasts made by analysts. The company, in fact, presented positive 2022 closing results, with an increase of 5.5%, up to 60,530 million euros. However, it has experienced a mammoth profit drop of 71%. This decrease is related to a charge of 5,900 million due to an administrative matter: the transfer of the pension plans of some 100,000 employees to two insurers.
Cut template, the solution. In order to loosen its economic tension and the general recessive situation in the sector, the company is now preparing to cut its workforce by 1.5%. In total, 3,900 will see the door in the coming days, as announced by the financial director, James Kavanaugh. Who will be affected? The layoffs will focus on workers left behind after the separation of the Kyndryl and Watson Health units.
Wave of mass layoffs. IBM is not alone in making this decision. While each has its own reasons, there is a growing trend for tech companies to lay off en masse to cope with tough global economic conditions and a return to a pre-pandemic way of life, less dependent on digital services.
Among them is Alphabet, the parent company of Google, which will put an end to around 12,000 jobs worldwide, 6% of the workforce. On the other hand, Microsoft has announced the cut of about 10,000 jobs and at the beginning of the year Amazon raised its number of layoffs to about 18,000 workers. Twitter will lay off 87% of its Spanish workforce in February and Spotify joins in laying off 600 of them. Last year, Meta announced a cut of 11,000 people. Of the big five, only Apple has escaped this guillotine.
Why? It is mainly due to the rebound effect of the pandemic. During the Covid years, the digital sector was boosted and technology companies experienced drastic growth, expanding their structure and opening new services. But now that we’re back to normal and demand is down, companies are downsizing their teams to cope with falling revenues. In addition, the rise in interest rates affects them, since some of these companies are in debt.
lack of talent. As we mentioned in Xataka, the labor market faces a shortage of talent. Carmine Di Sibio, CEO of EY, believes that there is nothing like a big job pool of laid-off tech workers right now. And he claims that there are no more qualified personnel available. In an interview with Bloomberg, he explained that job demand was still tight despite the tech layoffs: “If you read the headlines about what’s going on, you might think there are a lot of people out there who know about technology. “.
However, the explanation could lie in the speed at which workers in this industry find new jobs. According to a ZipRecruiter survey, 79% of these laid-off workers find work after three months or less of searching.