Layoffs !! What is Happening In Tech Industry? Why are there many Layoffs happening?
Recently we have seen in newspapers and online media about the “Layoffs”. Many companies are laid off their employees. It’s very hard to hear but it’s a reality that happening around us. Many people in different countries are faced laid off in recent times. Here we are going to check what is the reason behind these Layoffs. how it’s happening in the Tech industry.
Layoffs are happening for the last few months, big companies like Amazon, Meta, and Google, have laid off their many employees. Many startups from India also laid off their employees. Many companies are canceled their internship program and many companies not giving proper joining dates to those who are hired through campus placement. These all happen due to the recession.
What is a recession? is recession exists now?
There are two definitions we can see and the first one is Usually, the economist says that if both quarterly GDP result of a country is negative then it is considered as the country is in recession. US GDP for the first quarter and the second quarter was slightly negative; it is -1.6, and -0.6 respectively, and positive ie +3.2% in the 3rd quarter.
The second one is by the National Bureau of Economic Research which identifies recession by considering various parameters like personal income, consumption, expenditure, industry production, etc.
In 2022 GDP of the USA goes down but the head of the federal reserve said that recession is certainly a possibility. Later we have seen that the US inflation rate has risen to 7.5%. It was the highest rate of inflation since 1982. In the last months of 2022, it has reduced to 6.5% and still, it will be in a higher stage.
If the US inflation rate increases that will affect the global market. The reason behind this is most of the big companies originated in the US. If the inflation rate increases the government bodies will start working to reduce that inflation rate. For that, they will make changes in Repo and reverse Repo rates. If the repo rates increase the interest on loans will be increased.
This will directly affect the companies. They will start laying off some of their employees to cut down the costs. This is one of the reasons for huge layoffs. Another reason is the war between Ukraine and Russia. this also will lead to layoffs in companies
Why Indians startups layoffs employees
Most of the Indian startups are in loss-making only. Since they are new to the business, they need to focus more on marketing and advertisements. After the corona hits the economy, most of the work moved into work-from-home mode. Due to this IT companies are raising slowly.
The recession in Us affects Indian startups also. Because some of the IT startups are invested by US companies. When they face struggles that will impact Indian startups also. companies will stop investing in other companies and it leads to force the companies to cut off their employees.
After the pandemic there are huge changes happening in the lifestyle, Many people do not want to go outside and started ordering food from Swiggy and Zomato. For ordering groceries and electronic products, people started depending on online portals. This leads many of the normal shops to shut down their business and this all leads to unemployment.
What is happening In Tech Companies?
Big companies like Google, Amazon, and Meta are struggling in this recession. If you look at the data in a Monthly time frame you can see a gradual decline in their stock price. And Meta’s stock price also fell a few months back. All news indicates that these big companies are also struggling in this recession. That is the reason they are cost-cutting by layoff their employees.
What is the Hope? when this layoff will reduce
By analyzing the finances we can say we are in a recession time, but this situation also will go in some time. When the pandemic hit the world most people thought its an end but we have faced that and overcome those and now we are in 2023. In the same way, we can expect a gradual increase in expansion in all industries,
You should always need an emergency fund to secure your future in case you get laid off by any company. The IT industry is still in a growth stage there are many countries like India that have huge markets for IT products. As I mentioned earlier people started using more online services so this will get increased by day by day.