Tech layoffs are all but a thing of the past

Layoffs in the technology industry have slowed sharply in recent months, bringing the number of jobs lost to tech’s efficiency push to a near stop.

According to several services that track layoffs in the tech industry, after reaching a local maximum in January, the number of people laid off had declined by more than 90% by September. What’s more, some tech companies are hiring again to refill some of the roles that they had eliminated mere months ago.

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Such a quick shift from mass personnel cuts to more stable employee rolls and even hiring efforts may seem surprising, but it’s been a long time in the making. Data from popular tech industry layoff tracker Layoffs.fyi shows that job cuts have slowed for seven consecutive months this year, plateauing around 10,000 per month from June through August and declining to just over 3,000 so far in September.

Data visualization by Miranda Halpern, created with Flourish

TrueUp, a jobs board focused on the tech industry, also marked that tech industry layoffs peaked in January and declined sharply thereafter. However, TrueUp’s layoff count shows a slightly lumpier trend in the total number of staff cuts. Regardless of the source, though, the trend is clear that job cuts are on the decline.

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And that’s not even the good news. This column pointed out in July that while the number of roles slashed by tech companies was falling, the number of companies doing layoffs was trending upward:

[W]e’re moving past the era when tech companies were slashing head counts deeply and broadly. Instead, we are seeing smaller, more tactical cuts as these businesses seek to shave off the last bits of operational excess. For tech employees, this is generally good news, but the danger hasn’t passed for people who weren’t affected by earlier layoffs. The damage is simply being spread around more than it was earlier in the year.

We were right, directionally. The worst was behind us and the trends were positive. What we did not anticipate, though, was such a rapid shift from job cutsto rehiring. As Insider wrote this week:

Whether to return is a question some former Salesforce workers are likely asking. The company plans to hire some 3,000 employees after cutting 10% of its workforce at the start of the year. Salesforce told Bloomberg it expects to hire in areas like sales, engineering, and data cloud product teams — and said the new workers will help grow the company’s AI business to draw further investments.

Asking people you’ve laid off to come back is not as silly as it sounds. If you lay off a bunch of staff and then realize you actually need those roles, you want to hire folks already familiar with your company’s products, processes and people. After all, your company already knows those workers’ details, what they are like to work with, and where they have most recently toiled. That’s a pretty attractive package!

Sure, we could mock tech companies here for cutting jobs too broadly, deep or both, but by going back to the very people they laid off, tech companies are in some cases going to have to pay for their mistakes. I don’t know about you, but if Apollo let me go tomorrow and then reached out a few months later asking me to return, I wouldn’t do it unless they paid me a chunk more money. Salesforce could find itself paying more for talent that it simply could have kept.

Why the change?

Theory-crafting a little, there are two reasons why I suspect we’re seeing layoffs all but cease and tech companies look to staff up once again:

1. The pressure on tech valuations has lifted a bit, shifting the profit-growth balance that tech companies are expected to meet. Profits are good, but growth is creeping back as the key tech measuring stick. That means companies need more, not less, people.
2. Internal deadlines and external expectations for adding generative AI to tech products means that tech companies need to expand their employee roster, not shrink it.

What strikes me about those two trends is that there is no near-term reason for them to invert. Provided that tech stocks don’t drop by a surprise 10%, I suspect that we’re entering a period in which tech companies once again grow their headcounts, just more slowly than they have in the recent past. But the layoffs era? It’s all but over.