You probably already know what Google, Twitter, Netflix, Amazon, Meta, and OYO have in common if you follow the news. They are all victims of the most recent wave of mass layoffs. They don't seem to be the last either. There will undoubtedly be additional layoffs. Over 30,000 tech workers had been let go as of late July 2022. No sector seems to be completely protected, not even e-commerce or cryptocurrencies.
We got here because of missed earnings targets, hiring too much, and disruptions brought on by the pandemic. We arrived here as a result of missed profit targets, excessive employment, and pandemic-related disruptions. Therefore, it's important to understand how mass layoffs came to be accepted, why they're taking place now, and what you can do to prevent terminating your loyal employees.
History of Mass Layoffs
Unbelievably, prior to the 1980s, mass layoffs were extremely uncommon. Prior to the 1980s, layoffs were viewed as unusual and indicative of a catastrophic failure of the company.
This assumption was altered by World War II and deregulatory policies under President Jimmy Carter. In order to promote competitiveness, notorious CEOs like Jack Welch of General Electric and Al Dunlap of Scott Paper Company started to normalise large layoffs and brag about eliminating employment for employees.
Boasting over layoffs is obviously unacceptable in the modern world. Executives are aware that eliminating jobs is a difficult choice that nobody likes to undertake.
But when trying to comprehend the current layoff wave, the notion that competition motivates layoffs clearly sounds true. In order to remain successful in a crowded market, tech businesses feel the need to adopt dramatic actions. The standard response to economic unrest is mass layoffs.
Why Mass Layoffs are widely happening in Tech
The current status of the economy is ideal for layoffs. High-growth businesses and IT firms that had previously forecasted rapid development and expansion have not met their targets. In essence, the rapid growth that occurred in the early stages of the pandemic has subsided.
Mass layoffs occur frequently, but the tech industry is particularly unstable. Mass layoffs in the IT sector increased by 781% in May 2022 compared to the first few months of the year. Some CEOs believe layoffs are necessary to achieve financial parity when coupled with persistent inflation.
Many experts predict a recession given the atmosphere of dread and uncertainty. Budget cuts and employment freezes are being driven by fear as tech businesses try to build up their cash reserves. Anxiety can be caught up easily. Mass layoffs, however, are by no means the only method of cost-cutting.
Five Tips for Keeping a Sustainable Business Model
Despite economic disturbances, widespread layoffs are not inescapable. As a manager, you may take advantage of this chance to motivate your team as you navigate the ambiguity together. You can make changes to prevent firing your employees with some careful planning and strategy.
However, we've provided some suggestions below to keep you and your team motivated during this difficult period of widespread layoffs.
- Go Remote
Going entirely remote or hybrid a few days a week could result in significant financial savings, depending on your lease. Reduce the amount of days you require employees to be in the office if you're using a coworking space. Think about the Rs.50,000/- a year that employers save with each partially remote employee. Additionally, this flexible work arrangement will keep your staff content.
- Voluntary Layoffs
Don't let your talented staff members leave. However, voluntary layoffs will aid in negotiating the departure of someone who was considering it. Give those who voluntarily want to be laid off a financial incentive. This choice might be advantageous to both parties for workers who are nearing retirement. You can get a great start on their retirement and recover some more money.
- Cut Back Spendings
Get your calculator and budget sheets ready. An audit of any discretionary expenses is a good idea. Consider how at ease you are with investments, subscriptions, and business travel. Remove any programme that has a monthly fee but isn't used. Without losing culture, switching from monthly to quarterly team lunches can save some money.
Bottom Line
Even though many businesses have undergone major layoffs and job patterns for 2022 are still changing and evolving, economists claim that this won't necessarily be the norm going ahead.
Due to a cash shortage and a lack of funding, many companies are finding it difficult to survive in an unstable climate. More than 40 Indian startups, primarily those in e-commerce, education technology, and services, have reduced their workforces. Even start-up companies had to close their doors because they were unable to raise the necessary money to operate.
Recent employment statistics demonstrate that employment rates are stable, and while some industries have been more severely affected by layoffs than others, these businesses were generally those that saw higher-than-average growth over the Covid-19 epidemic.
