Published: 24th January 2023
#WhatTheFAQ: Why are IT companies laying off employees? What is the situation of Indians in the US?
Weak consumer demand, a quick increase in interest rates, investor pressure and firm cost-cutting are significant factors when it comes to layoffs
Amid rising layoffs, there has been a surge of fear among several employees from various companies: both office-goers and those working from home (WFH). Panic, anxiety attacks, stress and depression are rampant as they fear losing control over their immediate future plans, say mental health experts. On average, about 3,000 tech professionals are losing their jobs daily in the month of January, including thousands in India.
In today's edition of What The FAQ, we bring to you the answers to questions like why companies are laying off their employees.
Why are companies laying off workers all around the world?
Analysts have suggested that the anticipated recession in the United States and Europe in 2023 is the main factor driving IT companies' decision to lay off thousands of workers. Weak consumer demand, a quick increase in interest rates, investor pressure and firm cost-cutting are further significant factors. Financial services, retail energy and the healthcare sector are also being impacted by layoffs, which are not limited to the IT sector. Cost-cutting, workforce reduction, relocation, buyouts and mergers are the main causes of layoffs.
The FED (Federal Reserve System, the central banking system of the United States of America) has been aggressively raising interest rates to combat inflation to soft-land the US economy or slow it down without putting it into a recession.
Which companies have laid off their employees and why?
Internet-based music streaming, Spotify, in response to the deteriorating post-pandemic economic outlook, announced on Monday, January 23 that it will be laying off 6% of its global workforce. Spotify is the latest tech company to do so, until now.
Tens of thousands of job cuts were announced this month by major tech companies like Amazon, Microsoft and Google as the COVID-19 pandemic's positive economic impact on the sector began to fade.
More people looked for entertainment when they were deserted at home during the pandemic, which was good news for Stockholm-based Spotify. Over the last few months, Spotify made a "considerable effort" to cut costs, but "it simply has not been enough", said the CEO of the music streaming company, Daniel Ek.
Video game Halo's developer 343 Industries shared a message about the franchise's future after being struck by the Microsoft layoffs. The announcement comes after Microsoft confirmed that it would lay off 10,000 employees before the end of March. Microsoft also announced plans to shut down its social virtual reality platform AltspaceVR, which offered immersive social spaces for people to interact with friends and colleagues as 3D avatars.
Google parent Alphabet announced significant job cuts on January 20. At the Mountain View, California-based company, 12,000 employees across product areas, functions, levels, and regions were affected by the elimination of all roles across the organisation.
How are employees in other countries dealing with layoffs?
Thousands of Indian IT professionals in the US are now struggling to find new employment within the time frame allowed by their work visas after their employment was terminated, preventing them from remaining in the country. This is due to a recent wave of layoffs at companies like Google, Microsoft and Amazon. Since November last year, nearly 2,00,000 IT employees have lost their jobs at firms like Google, Microsoft, Facebook and Amazon.
Many Indian IT professionals on non-immigrant work visas like the H-1B or L1 are currently looking for ways to stay in the US after losing their jobs and changing their visa status to find a new job within the allotted few months' time under these foreign work visas.
Adding to this, amid the layoffs, Google has paused its Program Electronic Review Management (PERM), a crucial step in obtaining an employer-sponsored green card. This is terrible news for employees, particularly those from India working in the US. Google has informed its foreign workers via email that it will halt all new PERM applications, leaving them in a precarious situation.
How are people responding on social media?
Social media, especially Twitter, is blowing up with posts about how people are being laid off in big tech IT companies with the hashtag #layoffs2023 and employees who have been laid off are expressing their anguish via their Twitter handles.
Nikhil Wad (@niekhilwad), consultant and social media marketer, as per his bio, posted: “Normalize candidate asking the HR "Where do you see this company in the next 5 years" instead of answering the other way around. #layoffs2023”
Rahul Maheshwari (@RahulTweetin), former Google employee said: “I'm NOT LAID OFF. I'm quitting.
#layoff #layoffs #layoffs2023”
Ravindra Singh (@raoravindrasing), founder and engineer @evehicleinfo and @EVZoN_in said: “Instead of laying off Apple employees, Tim Cook reduced his salary by $50 million. Why didn't Sundar and Satya do the same? #google #microsoft #apple #layoffs #layoffs2023”
Guru K (@GuruK66376452), former Microsoft employee, posted: “21 yrs long served sacked at @Microsoft …
So you are just “MICRO”soft @BillGates #layoffs2023 #LAY #layoffs”
Sachin K Sharma (@sachinsharmage),
If there is a notice of 3 months to serve before quitting then why there is no notice period clause incase of Layoff?”