There is this great site called www.layoffs.fyi, which tracks layoffs in the tech industry. The numbers are grim. More than grim, actually. Over 200,000 in the US in the last year alone, including eye-watering numbers at Meta, Amazon, Google, Microsoft, Salesforce and the other longtime stalwarts of the tech-fueled growth sector. What’s going on? Is tech dying?

How big are the cuts? Google — 6%. Meta — 13%. Microsoft — 5%, Salesforce – 10%. The list goes on and on.

It is kind of tempting to gloat and say — yeah, you guys grew too big for your breeches, got fat, complacent and arrogant, and now you are getting what you deserve. Tempting, but inaccurate across many axes, notwithstanding many pundits declaring the end of mega-scale tech.

But the whole thing has left some commentators scratching their heads a bit. No one really gets it. These companies have mountains of cash, hundreds of billions in some cases. They are wildly profitable. And more importantly, their revenues and profits absolutely rocketed during the pandemic when the rest of us sat grumpily in our lockdown hovels buying and using their digital products.

Here is one narrative that I read. Amusing and possibly true. The pandemic happens, and revenues start to soar, to say nothing of profits. The companies hire anything that moves to handle the sudden increase in business and to indulge their favourite new blockchain idea or to hop on the metaverse bandwagon or to build a new social platform or to deftly pivot into health tech.

Then the pandemic runs out of steam and all those depressed TikTok and Amazon surfers suddenly step out into the sunlight and decide to climb mountains and ride bikes and go to the beach, leaving their digital devices unattended. So suppose you are the CEO of the big tech company who worries about people going back to their real non-digital lives. And let’s say you’ve also just finished a doomsaying article about catastrophic inflation and recession.  

FIRE EVERYBODY! you scream, looking anxiously at the window where you might have to make your escape when quarterly results come out.

Elizabeth Lopatto, in an article for The Verge titled “Why are so many tech companies laying people off right now?” considers the possibility that tech companies are only laying off workers because other tech companies are doing it. Copycatting.

I thought her tongue was firmly in her cheek, but her view is supported by Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business, and a luminary in this field. He said “… thinking is hard work, which is why most managers don’t do it”.

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Lopatto goes on to quote the PR releases of the mega-companies on the day they announced their layoffs. She slyly comments on how similar they look, and wonders (tongue even deeper in her cheek) whether they all used the same PR company. 

To which I wonder — nah, more likely they all used ChatGPT.

In any event, it turns out that firing people is an iffy strategy anyway according to Prof Pfeffer. Yeah, it cuts some costs, but if your problem is revenue, then cutting costs will not only do diddly squat and may even contribute to even further reducing revenue.

Anyway, whither tech? Of course, no tech company is immune from trouble. Microsoft’s Bing is now positioning to whump Google upside the head by integrating the AI-of-the-moment, ChatGPT. TikTok ate everyone’s “short-video” lunch in only a few years. Meta has egg on its face, for now, about its shaky $10-billion metaverse bet.

But all these companies sit comfortably on massive user bases, carefully researched roadmaps, patent and IP vaults, enviable liquidity, easy access to capital and some of the smartest devs and product designers on the planet (yeah, I know, some of these devs fled for the world of crypto and the big payout longshot, but big tech still remains an attractive place for the best Stems, including, it seems, half of the Asian subcontinent.)

And what of those laid-off employees? Are they going to be OK (aside from the 31 massage therapists laid off from Google)? They are going to be fine, it seems. According to Ziprecruiter, eight out of 10 laid-off tech workers landed back on their feet within three months.

If one pulls back from the short-termism of quarterlies, interest rates, supply chains, wars (assuming, gulp, no global conflagration) it is tech which burns at the core of global economic growth (whether growth as a goal is a good idea is a different debate for a different day).

Fusion energy, tiny smart devices, decentralised social media, crypto, electric vehicles, artificial intelligence, health tech, greentech, regtech, agritech, virtualisation of this, that and everything. That hasn’t changed and won’t.

Big tech is not dead, not even sick. Just temporarily shedding some skin. DM 

Steven Boykey Sidley is a Professor of Practice at JBS, University of Johannesburg.