Are the current tech layoffs a result of over recruitment?

23 January 2023

The layoffs in the tech sector continue, with Microsoft and Google among companies announcing mass redundancies across their operations last week. Ten thousand people are impacted at Microsoft, and twelve thousand workers at Google have been sacked. Although both company CEOs struck a contrite tone in breaking the news, that will be cold comfort to workers who have lost jobs when higher inflation, and rising interest rates, are already posing challenges for many people.

But why are so many employers in the tech sector announcing layoffs, almost one after the other? A few weeks ago I read an article by Professor Jeffrey Pfeffer, of the Stanford Graduate School of Businese, who suggested the redundancies were a form of social contagion. One company sacks some workers, other feel they have to do the same.

John Gruber, meanwhile, writing at Daring Fireball, sees another possible reason for the job losses. He thinks many of the companies announcing layoffs had spent the last few years over recruiting:

There are numerous reasons the tech industry wound up at this layoffpalooza, but I think the main reason is that the biggest companies got caught up in a game where they tried to hire everyone, whether they needed them or not, to keep talent away from competitors and keep talent away from small upstarts (or from founding their own small upstarts). These big companies were just hiring to hire, and now the jig is up.