Nearly 25,000 tech workers were laid off in the first weeks of 2024. Why is that?::undefined

  • nihilvain@lemmy.mlEnglish
    414·
    5 months ago

    As others stated a small portion of that was due to over-hiring, some to follow the layoff trend and some to make the earnings call look good.

    But from what some experts are saying; there’s also another factor, which is even worse.

    There’s a looming threat of a recession hitting in a few months (which is said to be a much bigger recession than the post-Covid one). And this recession will be tied to the Commercial Real-Estate Bubble.

    They are saying that it will be like the 2009 Mortgage Crisis and will be very disruptive.

    There’s this theory that companies are reducing their headcount to prepare for this recession by reducing their expenses to the minimum. Which makes sense.

    For the companies without savings that is a must but the ugly part is that you see big names with huge amounts of money in the bank laying off people as well.

    Well, because they don’t want to invest that money on the people, they will use all that money to buy smaller companies when the recession hits. All big tech with enough money in the bank is rooting for the recession to happen so they can buy everything for very cheap and grow even more.

    • AccmRazrEnglish
      101·
      5 months ago

      I think another thing that isn’t being talked about with these layoffs, which would call for more unionization and policy making, is that “AI” is taking over these jobs.

      Also when companies merge, there are “redundant” employees. So like the recent Microsoft layoffs, those were going to happen.

      • nihilvain@lemmy.mlEnglish
        2·
        5 months ago

        Surely. AI is definitely a factor. But at the same time it’s a fad right now. It’s what Blockchain was a few years ago. Everyone is trying to jump into the AI bandwagon as it’s the new cool hip thing. Sadly unlike Blockchain this is getting people fired instead of getting hired.

        Even though AI creates remarkable results I don’t think it’s as mature enough as companies really think it’s to be. They are kinda gambling on that it will be able to cover the human work force before the effects of layoffs are felt by the customers.

        On that account I think the number one issue is about the cost, uninformed companies think that what they are paying today is the real cost of AI. But in reality all AI offerings are actually burning money to lure customers, to make them get rid of their workforce to get them really dependent on their AI. And when they achieve enough dependency the prices will increase, then the companies will see the real cost of AI. Basically the exact same thing that happened with Streaming Services.

        Another downside that people will notice after great adoption of AI may be that the variations of the results will start to look the same. If all of us use the same AI tool, giving similar prompts for our Ad campaign then most likely our Ad campaigns will look very similar, beating the most important necessity of an Ad campaign; recognition. To beat that AI should be used as a tool by capable people to ease their job and not to do their entire job.

        I think it will take a few years for companies to really realize that.

    • AA5B@lemmy.worldEnglish
      9·
      5 months ago

      I don’t get how there’s any connection. Sure, it sucks to own commercial real estate, or be one of the service companies that grew up to support office work, but isn’t the whole problem being that tech and other large companies no longer want to pay for that? This should be a bonanza for tech companies, saving billions of dollars that formerly went toward renting office space. Why aren’t we expecting a tech company boom?

      • ricecake@sh.itjust.worksEnglish
        8·
        5 months ago

        The anticipation is not that it’ll hurt the tech companies, but the economy as a whole. A generalized economic slowdown impacts everyone, even if you specifically benefited from it.

        If I could tell you exactly how it’ll unfold, I’d be using that to make a lot of money instead. It’s not even certain that it will happen.

        Commercial real estate was for a long time a roughly predictable investment, and profitable.
        Now profitability is severely reduced because people, including tech companies, are cutting their usage.
        If the market collapses, it’s unclear how far down it’ll drag the economy, so companies are bracing for it to be bad.

        • AA5B@lemmy.worldEnglish
          1·
          5 months ago

          Hopefully they’re wrong. Commercial real estate should have no direct impact on most tech

          • bitwaba@lemmy.worldEnglish
            2·
            5 months ago

            It won’t.

            It will have indirect impact. The question is how much.

            If the entire economy is down, people have less disposable income. The big income areas in tech are advertising, goods sales, monthly streaming services, and cloud compute.

            Less disposable income = less people buying things they’re advertised, less people buying shit they don’t need off Amazon, less people keeping their Prime, Netflix, YouTube Premium, Spotify, or Disney+ accounts active, and less cloud compute resources needed to drive e-commerce websites.

          • ricecake@sh.itjust.worksEnglish
            2·
            5 months ago

            It shouldn’t, but there shouldn’t have been a connection between home mortgages and the auto industry either.
            It’s not just the connectedness of the industry sectors, but their mutual connection to financial markets.

    • MarketsupremeEnglish
      8·
      5 months ago

      Do you have any more reading on how a looming recession is will mirror 2008?

    • trustnoone@lemmy.sdf.orgEnglish
      3·
      5 months ago

      I feel like something big is coming soon too. My guess is a recession like that, but i don’t know the economy enough to know. But somehow, someway, all the corporate places are firing and all the grocery stores are adding security layers in my country (expecting more thefts due to a down trend of money?).

      Just feels like somethings off and all the rich companies with economic analysis teams are already putting in their action plans.