Tech in Chaos: examining the patterns and ripples of layoffs in 2023

Let’s circle back to 2020. 

A notorious year that united the world in a fight against the COVID pandemic. Anyone anywhere could be infected. The “lockdown” order shattered the dividing walls of race, religion, class, industries, and more. What came out of it, such as massive job loss on one hand, and on the other hand, a hiring frenzy due to the vibrancy of the digital space and massive switch to remote/hybrid work model, are also benefits spread evenly across the world.    

This event would be a good mirror to fully understand the depths and impacts of the massive layoffs of 2023. 

Once again, the world (specifically, the global tech space) is united in a fight against economic decline, and the drastic effect of this is a recurrent surge of layoffs from January to December. In fact, the pandemic kicked off in late 2022, when top companies like Meta and X (formerly Twitter) announced in November 2022 that they were laying off thousands of employees. Sadly, it looks like this would splurge into 2024 as well. 

We have mentioned economic factors as the culprit behind this, and also that there may be a number of layoffs in 2024. But those are not the only trends that highlight the different rounds and stories of layoffs. In this article, we discuss 10 of them we have observed. 

The patterns and ripples of layoffs in 2023

1. Layoffs were spearheaded by the big guns in the industry. Based on speculations, this could have fueled similar moves by younger companies in a bid to grapple with recession and inflation. When the layoffs started, companies like Meta, X (formerly Twitter), Amazon, and Microsoft took the lead. And this didn’t just start in 2023; these big names closed out last year with layoff rounds that would move into 2023 and set the ball rolling for other layoff announcements across the world.

9,000 in March, 180 in November, bringing it to a total of 27,180. Note: The company announced more layoffs in its Alexa Unit in November. 1,800 (announced in July 2022, earlier than the rest.)

Note: reasons for this were said to have been “internal restructuring. Another layoff round was announced in October with the figure undisclosed)

2. Over-employment might have contributed to the layoffs, and now there are hiring freezes. While layoffs remain the dominant and supposedly most effective tool to mitigate recession and keep companies afloat, hiring freezes have been a subtle menace as well. 

But first, let’s take a stroll to the past: At the height of the pandemic, the digital space was in a social and commercial frenzy, and while remote/hybrid work was on the rise, companies went on a hiring spree. In retrospect, that wasn’t really a smart move for many, as it turned out to be over-employment, leading to oversaturation of workplaces and the need to lay off when recession and inflation hit. 

• Amazon’s workforce doubled to more than 1.6 million people during the pandemic and now has the highest number of layoffs. 

• Meta reported 48,268 staffers in March 2020, and more than 80,000 by September 2022. Then, it announced its 11,000 layoffs in November and announced it would be putting a halt to hiring through the first quarter of 2023.

• Spotify CEO, Daniel EK, said in a memo addressed to staff on December 4, that it was necessary to downsize the company after overhiring in 2020 & 2021 when capital was cheaper. Now, the company’s headcount will be trimmed by 17%. 

3. Company shutdown:

Perhaps, the pandemic year isn’t the worst global-cide after all. On economic recession, some had it worse, and layoffs weren’t enough to stay afloat. In fact, staying afloat was out of the question as a few companies either had to divert resources, revisit their goals and framework, or close down totally. Mostly, the financial factor leading to these shuts down is the failure to raise funds to continue operations. According to Business Insider Africa, there’s been a 48% decline from $2.7B raised in the first nine months of 2022, compared to January to November 2023 (only $1.4B was raised by 186 startups in Africa). However, some companies’ shutdowns are reportedly not connected to economic situations, but internal conflicts. 

Here’s a list of African startups that shut down this year: 

By the end of December

(after laying off 900 employees and relocating 60% of top management from the UAE to respective African countries)

4. Layoffs have gone beyond tech to include other industries as well:

While the tech industry is leading the layoff conversation, non-tech industries were affected too. Apparently, economic dwindling cuts across all industries.  And while the tech industry tops the chart, non-tech niches within the tech industry, according to layoffs.fyi,  are mostly affected. The least affected role and industry in 2022 was HR, while the highest was Retail and “other” groups outside core non-tech in tech roles. In 2023, the least affected are Real Estate and “other” groups, the most affected. Notably, while 100+ fintechs laid off in 2022, the numbers reduced in 2023. 

5. Fundraising didn’t stop layoffs: 

Not even success at the investment scene could stop layoffs and shutdowns. A few companies had successfully raised funds, yet had to cut down jobs or shut down completely.  In May 2022,  Bolt laid off 250 employees after raising a $355M  series E  funding round and achieving a peak valuation of $11B. In November 2023, Pivo also laid off a year after raising $2M in seed funds. Even though its leaders did not attribute the recent layoffs to economic challenges, BB trade platform, Udaan just laid off 10% of its workforce shortly after raising $340M.  Although, it’s also noteworthy that fundraising has reduced this year. According to Rest of World, “African startups raised only $1.3B in the first nine months of 2023, compared to $3.3B and $2.9B raised within the same period in 2022 and 2021, respectively.”

6. AI’s place in layoffs: 

It could be valid to say the rise of Artificial Intelligence encouraged layoffs. However, it’s also interesting to note that one of the new job requirements, for companies that kept hiring, is AI proficiency.

7.  Top companies that didn’t lay off this year:

Are there companies that didn’t lay off through all of these? Certainly.  Apple, LG, and MasterCard top the list of global companies that haven't laid off their staff since the job cut spree began. Flutterwave, notably, has also not recorded any layoffs despite the controversies that plagued the company over the months. 

8. Migration rate among Africans hasn’t reduced:

Macrotrends reports a 2.5% decline in migration between 2022 and 2023, and this is tied to economic factors as well. While massive migrations to the United States and Europe, mostly, are still in vogue, the price of moving has become way more expensive than it used to be. So, despite the massive layoffs that rocked the year, Nigerians and other Africans are still trooping out, settling in Western countries to find greener pastures. The consequence of this, perhaps, is that while the tech space may now have little room for new employees, other sectors will have to bear the surge. Plus, the world may soon have many more graduates than it did, as education remains the top route for a lot of immigrants. 

9. Severance packages:

Big tech companies had fixed severance packages for victims of their layoffs at the beginning of the year. Similar benefits occur across other companies that announced their severance packages, including Paystack in November. The latest, which came from Cowrywise, gave the 5 laid-off employees three months' salary instead of one. The goal, we can deduce, is to avail victims enough to sustain them till they get other jobs. But, how soon can that happen?  Over the months, however, victims have lamented how these packages cannot replace the constant security that holding a job gives, hence a new placement would suffice the most. Notably, though, Paystack’s CEO and co-founder, Sola Akinlade,  promised to ensure that many of the victims of the company’s job cuts get into new jobs as soon as possible.

10. 2024 layoffs:

The job cut scourge came to the limelight towards the end of last year, and even though there were projections toward this year, the numbers weren’t so expected. Now, as the year closes out, there are announcements of pending layoffs on one hand, and on the other hand, the economy isn’t getting any better. However, a few companies have promised that hiring freezes cease next year and new roles will be ready to be filled. Until then, fingers crossed. 

Ranking

• Highest layoff: Amazon, with a total number of 27,180 job cuts

• Highest layoff rounds: ChpperCash, with 4 rounds of layoffs

• Top big tech company (FAANG) with no layoffs: Apple

• Notably, Flutterwave hasn’t recorded any layoffs despite its leadership crisis and controversies. Additionally, the fin-tech hired 170 graduates from its maiden graduate trainee program between 2022 and 2023 and hired 6 new executives in November 2023. 

To get a full list of 2023 layoffs, check TechCrunch AND Layoff.fyi.