Dive Brief:
- Over 26,000 tech industry layoffs were announced in August, the highest monthly level since January, according to data from the website layoffs.fyi.
- Apple, IBM, Cisco, Dell and Intel were among 48 tech companies that announced a combined 26,024 staff reductions last month, according to layoffs.fyi, which tracks such data. More than 400 tech companies have announced job cuts since the start of the year, impacting over 130,000 workers. The highest monthly count was 34,107 in January.
- “The trend of tech companies downsizing with a focus on productivity, profitability and efficiency is continuing, with no signs of going away any time soon,” Giuseppe Gasparro, a partner & managing director at New York-based consulting firm AlixPartners, said in an interview.
Dive Insight:
Tech sector headcounts, which ballooned during the COVID-19 pandemic amid heightened demand for information technology products and services, have reduced as industry executives focus on belt tightening to fund artificial intelligence initiatives, among other reasons, according to an AlixPartners report released Wednesday.
“Whether they believe AI will be transformative is moot, as the fear of missing out is fueling lofty investments to avoid being left behind,” the report said. “These investments come at the expense of other strategic initiatives at a time when tech companies are already navigating a high-interest-rate environment, ongoing efforts to course-correct overhiring during the pandemic, and a deceleration in the market growth rate.”
The study found that 64% of tech companies across North America, Europe, the Middle East, and Africa executed some form of headcount reduction in the past 12 months.
Among those that laid off more than 5% of their staff this year, the top two reasons cited were cost-cutting due to rising operational expenses and the need to right-size after extensive hiring.
“We fear this trend may continue,” the report said.
A quarter of tech executives in North America said they expect to implement layoffs in the coming year, with an additional 37% expressing uncertainty about the need for workforce reduction.
Last week, Bloomberg reported that Apple was cutting about 100 jobs in its digital services group, part of a shift in priorities for the division. The layoffs included some engineering roles, with the biggest cuts being made to the team responsible for the Apple Books app and Apple Bookstore, according to the news outlet.
Meanwhile, Cisco last month announced a decision to lay off 7% of its global workforce, as previously reported by CFO Dive. The company said it was looking to invest in key growth areas such as AI while also driving more efficiencies in its business.
