Introduction
There is a dramatic change in the world of work in recent years. People’s preferences about work are also changing with this. The most significant shift has been the rise in layoffs. Big tech companies of the world across various industries are reducing their workforce by laying off their employees due to different reasons.
Layoffs 2023 are leaving a significant impact on the lives of employees.
In this blog, we will explore the real reasons for employee layoffs 2023, that includes economic downturns, company restructuring, technological advancements, globalization and outsourcing, mergers and acquisitions, and cost-cutting measures. We will also take a look at the insights into how these reasons can impact employees and suggest ways to diminish the impact of layoffs on them.
Being Laid Off vs Getting Fired
Being laid off and getting fired are both terms used to describe a termination of employment, but both the terms are significantly different. When an employee’s employment is terminated by their employer for causes beyond their control, this is referred to as being laid off. Layoffs frequently occur as a consequence of economic hardship, organizational change, or a drop in business. In a layoff, neither the employee’s termination nor the loss of their employment are attributable to the employee’s performance on the job.
On the other hand, being fired refers to a situation when a boss fires an employee due to poor performance or undesirable behavior. In this instance, the employee is to blame for the cause of termination.
For instance, the CEO of a startup, Better.com, terminated 900 employees on a zoom video without even any notice. This can be considered as a mass layoff that happens because of the reasons that are beyond your control. Whereas when you get fired, it is due to the poor performance in your work.
What is recession?
Recession refers to a significant decline in economic activity that lasts for an extended period and also affects multiple sectors of the economy. This results in reduction in consumer spending, businesses produce less, unemployment rises, and the stock market also experiences a decline. Governments and central banks are responsible for recession and take steps to mitigate its effects. Consequences of recession often include a decline in productivity, a decrease in demand for goods and services, or a financial crisis.
The cause of the economic slowdown in India is hiking interest rates by central banks, high inflation and Russia-Ukraine conflict. Experts are saying that the global markets and the Indian market are already experiencing the consequences.
How recession is affecting the economy?
Recession can have a great impact on the economy. Its effects can be seen across multiple sectors and industries. Unemployment is the most significant effect of a recession. Businesses can reduce their workforce or freeze hiring employees. This makes it difficult for people to find jobs, resulting in decrease in consumer spending, which can further hurt the economy. Businesses also cut back on investments that reduce economic growth. Stock market experiences sharp declines in stock prices that impacts investor’s portfolios. Recession can also lead to financial instability which can result in bankruptcies, foreclosures, and other financial difficulties that impact the economy.
Why are these Companies laying Off?
Tech companies are undergoing mass layoffs. If we talk about India, companies like Dunzo, Sharechat, Rebel Foods, Captain Fresh, BharatAgri, Ola, CoinDCX, TCS, Wipro, Infosys and many more have laid off thousands of workers.
As per a trusted source, more than 46,000 workers in US-based tech companies laid off employees in 2023. Google is planning to lay off 12,000 employees, Amazon is laying off 18,000 employees in the US and 1,000 staff in India in the year 2023. 11,000 employees laid off in Meta, Twitter fired half of its workforce, IBM is cutting over 3,900 employees, SAP is laying off 3,000 jobs, Salesforce planning to lay off around 8,000 employees, involving India, TCS fired 2,197 employees, Wipro fired 452 freshers and Infosys also fired 600 employees. Followed by Spotify technology, Microsoft and Coinbase and many more companies.
Also Read: Recruitment 101: Best practices and Techniques
Reasons Why Companies Layoff their Employees
Layoffs 2023 are a difficult and harsh reality for many businesses and their employees. They can be caused by various factors. Some of the reasons of laying off employees can be:
- Economic Downturns
An economic growth also known as recession, refers to a significant decline in economic activity that lasts for an extended period and also affects multiple sectors of the economy. We have discussed recession earlier. Economic downturn is a period of time when a company experiences a decline in the production of goods and services, that results in decrease in demand for labor and ultimately higher unemployment rates. It is usually characterized by a decline in gross domestic product(GDP) that means the total value of goods produced within a country. This decreases consumer spending, business investment, international trade and stock prices.
- Technological advancements: Technological advancements can also be the reason for layoffs 2023. Companies automate their processes and start to rely on technology to perform tasks that were previously done by humans, now they need fewer employees to finish their work. In this case, layoffs can be done by the companies.
- Cost-cutting measures: When there is a decreased demand for a company’s products or services, rising costs of raw materials or labor, or the financial pressures then also a company can layoff employees to simply reduce their cost.
- Mergers and acquisitions: When companies decide to merge or one company acquires another, the job responsibilities or departments of overlap. To avoid this situation and reduce costs, the newly formed company can eliminate some positions or departments. For instance, Idea merged with Vodafone and they became “Vodafone Idea Limited” together.
- Poor performance: Companies can also layoff when employees perform their duties poorly. Companies choose to let their employees go in these situations. This can happen at any level of the organization whether it is entry level positions or top executives.
- Outsourcing: In the case of outsourcing, companies outsource their work to third-party vendors or contractors. They may not need to keep certain positions in their organization. This results in layoffs 2023, as the work is shifted to the external contractor. For instance, if a company outsources human resources management from a third party contractor then it no longer needs the human resource management in their organization.
What are the real reasons for employee layoffs 2023?
There can be many reasons why big tech companies are laying off their employees in 2023. One of the main reasons can be the arrival of artificial intelligence as it has replaced all human work by technology. Other reasons can be pressure from investors, Covid-19 over-hiring and many more. We will discuss all of them in this topic.
- Automation and Artificial Intelligence: Arrival of technology and AI has replaced human work. Companies are adopting AI and automating tasks to reduce their costs. They may no longer need as many employees to perform certain tasks, which is leading to layoffs 2023.
- Economic Downturns: Companies are experiencing recession and are expecting to continue the layoff in 2023. During a recession, they may need to cut their cost in order to survive. Businesses are experiencing a decrease in sales, revenue, and profits and one of the easiest ways to do this is, unfortunately, layoffs 2023.
- Covid over-hiring: COVID-19 has had a significant impact on businesses. Employees of many companies were also affected by the arrival of this pandemic. Some big companies experienced an increase in demand for their products and services during the pandemic, for example, sanitizers, masks, and delivery services. Companies hired more employees than they needed to meet the increasing demands of their products and services. But now, with reduced demand and revenue, these companies have to layoff their employees.
- Pressure from investors: Investors in big tech companies like Meta, Twitter, Google, Amazon, etc are pressuring the management to make decisions to solve the slowdown in growth of the companies.
- Tech sector maturing: Layoffs 2023 are also the result of hypergrowth of the tech sector. The tech sector is growing rapidly over the past decades. Experts believe that the recent job cuts are indicating the maturing of the tech sector.
- Negative cash flows in new investments: Some newly made investment initiatives by big tech companies are unprofitable. These companies are facing loss and lesser profits. So, again to reduce their costs, they have to choose layoffs 2023.
Also Read: Understanding the Skills Gap in the Workforce- Reskilling to Addressed Skill Gap
Will the Layoffs 2023 Increase?
Unfortunately, the answer to this question is, yes. Experts said the technological advancements will lead to layoffs to reduce the employees that are no longer needed to complete the tasks. Artificial Intelligence has replaced many jobs and this has affected employees and the growth of the companies.
Emotional Toll of a Layoff
Layoffs can take an emotional toll on employees. Losing one’s job can be a traumatic experience. It can cause a range of emotional reactions including stress, anxiety and fear. It can be further extended by factors such as financial strain, uncertainty of the future, and loss of support.
Losing a job can be a major source of stress for employees. It can cause financial insecurity, loss of sense of purpose and can impact one’s self-esteem and identity. Stress from loss of job may lead to feeling of hopelessness. It can also lead to physical symptoms such as headaches and fatigue. Stress management becomes really important in these situations. Mental health is more important to help you get back to the place you were. Instead of panicking because of job loss, you can try to be calm and make certain decisions for yourself.
Getting Visibility in an Organization
Getting visibility in an organization is critical for advancing your career, building your reputation, and gaining recognition for your contributions. Build relationships with your colleagues across different departments, take initiatives, share your ideas during team meetings, be reliable, and meet deadlines. This can help you stand out as a valuable contributor. All these practices can give you the confidence and recognition you need to be successful in your work.
Conclusion
This blog is all about the reasons behind the layoffs 2023 by big tech companies. You got to know about the reason why companies are laying off their employees, the difference between being laid off and getting fired, aftereffects of the loss of a job. This blog also talks about recession and how it is affecting the economic growth of the world. Stress management after the loss of a job is a critical task and getting visibility in an organization becomes very important.
Frequently Asked Questions (FAQs)
Employee layoffs refers to the termination of employees for causes beyond their control, this is referred to as being laid off. Layoffs 2023 occur as a consequence of economic hardship, organizational change, or a drop in business. In a layoff, neither the employee’s termination nor the loss of their employment are attributable to the employee’s performance on the job.
Employee turnover refers to the rate of employees leaving an organization. Organizations calculate their employee turnover quarterly or annually.
Companies are laying off their employees in 2023 because of the economic downturn, artificial intelligence, pressure from investors, covid over-hiring, tech sector maturing and negative cash flows in new investments. These are the keen reasons for the layoffs 2023.
TCS laid off 2,1967 employees. They are also planning to continue laying off employees on the basis of an internal assessment.
The real reason behind Google layoffs 2023 is the need for cost reduction as economic growth is slowing down around the world.
Yes, Amazon is a crucial as well as a very big part of the layoffs 2023. Amazon is also laying off employees because of the rapid hiring and uncertain economy. Amazon laid off 18,000 employees till now.
There is slow economic growth all over the world, and to survive this, organizations have to reduce their costs. Unfortunately, the easiest way to reduce their cost is to lay off employees that they do not need anymore. After the arrival of AI, most of the human work is done by AI, so there is less need of employees in the organizations.
Dealing with a layoff can be hectic and stressful. But with the right mindset and practices you can overcome this situation. Adopt a healthy coping habit to overcome stress of unemployment, give yourself time to adjust and think of the job loss as a temporary setback.
Layoffs can hurt a company’s performance in the long run. Investors stop believing in the viability of a company, which results in lower prices for the company’s stocks. Mass layoffs can damage the company’s reputation and morale. It might impact a company’s ability to attract and retain good employees.
Layoffs are better. As, being fired refers to the termination of an employee because of poor performance or for reasons that were personal to the employee. Being laid off means that the company eliminated an employee’s position for financial reasons and not due to employee’s fault.
