Editorial: Tech turmoil

The global tech industry is in turmoil. Layoffs and hiring freezes have become buzzwords as tech giants — from Facebook, Twitter and Google to Amazon and Microsoft — lay off workers en masse. The situation is especially dire for Indian workers in the US on H-1B visas, as they must find alternative employment or leave the country within the stipulated 60 days. Amazon plans to cut 10,000 jobs this month, while maverick billionaire Elon Musk, who recently took over Twitter, is on a layoff spree, laying off nearly half of the company’s workforce. Facebook’s new incarnation, Meta, is cutting 11,000 jobs, or about 13% of its workforce. The layoffs come as big tech companies face revenue challenges that have slowed business. Advertisers hit pause mode amid recession fears in an extremely uncertain macroeconomic environment. The main reason for the deterioration of the business environment is the war in Ukraine that broke out at the beginning of the year. It sent global energy prices skyrocketing and plunged the entire world into hyperinflation. To combat this, the world’s most important central bankers have followed the Fed’s lead by raising interest rates. Globally, more than 120,000 jobs have been lost, according to Layoffs.fyi, a website that tracks technology layoffs. As our lives have moved online during the pandemic, business has boomed for the tech giants, leading to a surge in hiring. Now it turns out that the tech industry overestimated the need for human resources.

Additionally, many companies have slashed online advertising budgets as the global macro economy struggles. In the fintech space, rising interest rates have also hit companies. For their part, investors have also stepped up pressure to cut costs, blaming technology companies for being too bloated and slow to respond to signs of an economic slowdown. People have less tolerance for investing big money on high-tech gambles like virtual reality or driverless cars that may not pay off in the short term. Investors also believe the high wages and perks some enjoy in the industry are unsustainable. The aura associated with the tech industry has been fading. Indian tech companies have also put hiring on hold in the face of slowing revenue growth. Given the economic uncertainty, investment funds from around the world are flocking to the safety of the US system. As a result, the dollar strengthened, making imports more expensive and adding to inflationary pressures from high fuel prices. The slowdown needs to be viewed in the context of the strong growth tech companies have witnessed during the pandemic, as industries across industries seek to adapt their systems to handle “work from home” demands.