The technology sector’s employment woes have deepened in 2024, with companies across the spectrum announcing fresh layoffs, indicating the trend that began two years ago shows no signs of abating.
The wave of layoffs has swept through major tech companies including Mozilla, Sonos, Boeing, Stellantis, Samsung, Brave and GoPro. In India, companies like Swiggy, Ola, Unacademy, Cirium, Freshworks and Reliance have also trimmed their workforce through the year.
Cloud storage company Dropbox is cutting about 20 percent of its workforce, while social media platform TikTok plans to let go of approximately 500 employees, primarily in content moderation roles that will be handled by artificial intelligence.
“This market is moving fast and investors are pouring hundreds of millions of dollars into this space. This both validates the opportunity we’ve been pursuing and underscores the need for even more urgency, even more aggressive investment, and decisive action,” Dropbox CEO Drew Houston said in a note to employees.
The company faces intense competition in personal and enterprise business from technology giants Google, Microsoft and Box.
Indian companies haven’t been spared either. Chennai-based software-as-a-service company Freshworks announced plans to lay off 660 employees from its global workforce of 5,500.
“There’s simply no good time to make a decision like this,” Freshworks CEO and president Dennis Woodside wrote in an email to employees.
The decision drew criticism from Sridhar Vembu, CEO of Zoho Corporation, another Chennai-based tech company. “I can understand the unfortunate reality of layoffs when a business is struggling or declining and making a loss. This is not that situation, this is naked greed, nothing less,” Vembu wrote in a social media post.
He pointed to Freshworks’ strong financials, including $1 billion in cash reserves (approximately 1.5 times its annual revenue), 20 percent growth rate, and ability to fund a $400 million stock buyback.
“Here is a critical question to its leadership: don’t you have the vision and imagination to invest $400 million in another line of business where you can deploy those people you hired but you don’t want anymore?” Vembu questioned.
Industry experts attribute the continuing layoffs to multiple factors. Artificial intelligence’s growing capabilities are replacing human workers, as evidenced by TikTok’s decision and IBM’s earlier announcement to replace 8,000 employees with AI in coming years.
“Since last year, challenging economic conditions and an unstable geopolitical situation have made it difficult for many businesses to access capital and expand profitably. To stay competitive in this dynamic environment, continuous learning and up-skilling are crucial to adapt and evolve,” said Hari Krishnan Nair, co-founder of ed-tech company Great Learning.
Even profitable companies aren’t immune. Qualcomm, which recorded $35.8 billion in annual revenue for 2023, plans to lay off 226 employees at its San Diego facilities. This follows the departure of over 1,200 employees last year.
“As part of a normal course of business, we prioritize and align our investments, resources, and talent to ensure we are optimally positioned to take advantage of the unprecedented diversification opportunities in front of us,” a Qualcomm spokesperson said.
Music streaming platform Tidal is finalizing its second round of layoffs in less than a year. Block CEO Jack Dorsey, whose company owns Tidal, told employees in October that the company needs to work “like a startup again.”
Luminar Tech CEO Austin Russell, whose company develops autonomous driving technology, summarized the industry’s predicament: “Our overhead was built in a different climate, view on value, and cost of capital.” The company plans to reduce certain functions by 30 percent.
The US Federal Reserve’s previous inflation control measures have increased borrowing costs and debt servicing for businesses, forcing them to simplify organizational structures and reduce costs.
Tech and auto companies, amidst letting employees go, can hope the core of their businesses including technology, product and diversification plans, are on solid ground. If not, 2025 could bring a lot more pain.