58% Blame Overexpansion for the Layoff Season

Staff layoffs continued to pummel giant tech companies. An analysis of Crunchbase News data shows that over 90,000 U.S. tech workers have been laid off in mass job cuts so far in 2022.

A wave of significant layoffs is crashing across Silicon Valley. Meta cut 11,000 employees or 13% of Facebook. Twitter laid off 3,700 employees — nearly half of its global employees. Amazon began letting employees go, making up roughly 1% of its global workforce or 3% of its corporate employees. They are all reportedly downsizing.

Each company has its unique problems that cause this. Inflation concerns, rising interest rates, overexpansion, and market stagnation have all been blamed for contributing to this massive layoff season.

Is it possible for the layoff season to end, more so re-recruit workers once economic conditions improve?

A survey launched by Real Research, an online survey app, attempted to gather public opinion on the layoff season of tech giants.

The survey analysis further highlights the following:

• 14.35% say the global rising inflation rate is the primary cause of the layoffs
• 39.05% say layoffs are effective in the short term
• 87.8% are optimistic about the economic conditions improving soon

9 in 10 Know About the Layoff Season in Silicon Valley

According to a Real Research survey analysis, which examined Big tech companies’ layoffs in Silicon Valley, 63.43% are aware of the layoff season. In comparison, 27.13% have heard about it, and the rest (9.44%) are unaware.

Tech giants, including Meta, Amazon, Twitter, Google, and several others, have suggested various reasons for the wave of layoffs. As per respondents, the majority (14.35%) say the global rising inflation rate is the primary cause for the layoffs. Others cited revenue drops (13.9%), overexpansion during COVID-19 (13.34%), and stalling growths (12.59%).

Overexpansion as the Cause of Layoffs

Indeed, “overexpansion” is often stated as a reason for many layoffs in giants and conglomerates. It was blamed for the increasing costs in big tech companies, to which 58.56% of respondents highly agreed. While 22.42% somewhat agree that overexpansion is to blame for the recent layoff season, 1.9% highly doubt it.

In particular, reports say Meta has laid off employees who seem “undesirable” or failed to land new positions. However, affected managers and employees say otherwise– workers with a good reputation and strong performance have also been affected.

According to survey respondents, the layoffs of Meta have other underlying causes (26.26%). Meanwhile, the rest are divided between performance-based (22.81%) and not-performance based (22.95%) causes.

In one case, Vox senior correspondent Peter Kafka said that many of these big tech companies are saturated. 39.13% of survey respondents say it is highly likely that market saturation is the cause of stagnant growth in these said companies. 30.53% think it is likely to be, while 3.65% believe it is unlikely to be.

Are Layoffs Effective in Reducing Costs?

Roughly 9 in 10 believe it is. In detail, 39.05% say it is effective in the short term, while 25.18% say it is in the long term. 25.19% say it is effective in both.

Nevertheless, the majority of survey respondents (87.8%) are optimistic about the economic conditions improving soon. 25.86% are positive it will happen in 6-12 months, while the rest expect it in about a month (25.77%) or two years, perhaps (21.57%).

If it happens to be that economic conditions will improve, 35.44% believe it is highly likely that these tech companies will re-recruit workers. 27.45% say it is somewhat likely, while 8.08% say it is unlikely.

Consequences of Layoffs

Most (11.09%) said the productivity of the remaining workforce would be mainly affected by the layoff season. Others cited effects of layoffs on companies are loss of skilled talent (10.47%), loss of morale in the company (10.45%), and negative effect on consumer retention (9.53%).

On a macroeconomic level, the negative effects of layoffs would include mass unemployment rates, according to 38.18% of respondents. 22.72% said slowed economic growth, and 20.3% said reduced spending.

In general, the layoff season in Silicon Valley left most (13.31%) of the respondents shocked. Others have shared their opinion that what happened was unfair (13.21%) and unnecessary (12.34%). However, some believe that the layoff season was just fair (11.83%), necessary (12.6%), and agreeable (12.11%).