Big Tech’s wave of layoffs exposes an unsustainable hiring model
The Future. As Big Tech finally feels the correction that hit the rest of the economy months ago, many of the industry’s largest firms have laid off significant chunks of their workforce. Leaders at Stripe, Meta, and Twitter have all taken (partial) responsibility for the layoffs, citing overconfident hiring sprees and suggesting that Big Tech’s talent-recruiting craze was unsustainable from the get-go. The class of tech yuppies might be gone for good.
Too big to fail?
More than 100,000 tech workers have lost their jobs this year.
- For over a decade, firms like Google and Meta spent fortunes competing to attract top talent with wildly lucrative offers and playground-like campuses flush with amenities.
- These firms didn’t need to manage costs so long as they grew quickly enough to attract venture capital. Rather than reduce inefficiencies by firing ineffective employees, these companies simply hired more.
- Because tech has often been able to weather recent downturns, the industry was especially slow to react to the pandemic and the consequent economic slowdown. Meta doubled its staff in the past three years, while Robinhood’s workforce multiplied nearly sixfold in 2020 and 2021.
Now that these companies can no longer rely on seemingly endless streams of invested capital, their strategy has been given a gut check.
Time to pivot
On the one hand, some of today’s most successful tech companies — Uber, Dropbox, Airbnb — were born from the ashes of the Great Recession. This moment could be an opportunity for fledgling start-ups; after the economy hits rock bottom, there’s nowhere to go but up.
That said, newly unemployed tech workers may have to turn to other industries for reasons beyond their control. Tech companies were only so economically resilient (for so long) because the 2010s saw persistently low-interest rates that spurred investors to seek riskier investments. So, as those market conditions ebb, it’s likely that Big Tech’s hiring sprees will die with them.