While the S&P 500 and Nasdaq reach record highs, and tech giants like Alphabet, Meta, and Microsoft achieve unprecedented market valuations, the tech industry is witnessing a surge in layoffs this January.

According to data from Layoffs.fyi, approximately 23,670 employees have been laid off by 85 tech companies in January, marking the highest number since March when nearly 38,000 tech workers lost their jobs.

The wave of layoffs intensified this week, with SAP announcing changes affecting 8,000 employees, and Microsoft reducing its gaming division workforce by 1,900 positions.

High-profile fintech startup Brex also made headlines by cutting 20% of its workforce, and eBay eliminated 1,000 jobs, accounting for 9% of its full-time employees. eBay’s CEO, Jamie Iannone, attributed the move to the need for better team organization and nimbleness.

Google jobs

Earlier in the month, Google confirmed several hundred job cuts across its organisation, and Amazon announced the elimination of hundreds of positions spanning its Prime Video, MGM Studios, Twitch, and Audible divisions.

Unity disclosed its plans to cut approximately 25% of its staff, while Discord, known for its popular messaging service among gamers, is shedding 17% of its workforce.

The recent layoffs are attributed to companies’ efforts to reposition themselves for AI-driven strategies.

The tech industry witnessed a surge in AI demand, leading to workforce reductions in areas that companies believe have become less relevant as they invest heavily in AI product development.

Salesforce reduction

Notably, tech giants like Meta and Salesforce experienced significant stock market gains following cost-cutting measures in 2023. Salesforce, which reduced its workforce by about 10% in January 2023, saw its stock nearly double for the year, its best performance since 2009. Meta also witnessed a stock boost after announcing its cuts, achieving its best year since its Nasdaq debut in 2012.

While tech industry layoffs dominate headlines, other sectors are also witnessing workforce reductions, including the banking sector, with Citigroup announcing a 10% workforce cut, and media companies like Paramount and Levi Strauss announcing layoffs to streamline operations and enhance efficiency.

Despite the surge in layoffs, some experts caution against overreacting to the January data, emphasising the need for a nuanced analysis of trends. Investors await the upcoming tech earnings announcements, which may provide a clearer picture of near-term business and consumer spending outlooks.