Tech layoffs mount — but skilled workers are still hard to find

Some of the biggest tech companies in the world announced a wave of layoffs this week, eliminating tens of thousands of jobs as they reverse course after years of expanding.

Google's parent company said on Friday it would cut 12,000 jobs. Microsoft and Amazon eliminated a combined 28,000 jobs on Wednesday. All told, tech companies have shed more than 200,000 jobs since the summer.

But "this was largely expected," said Alex Zukin, the managing director at Wolfe Research.

"I think that many companies are right-sizing their staff." 

He says most of the big-name tech companies expanded dramatically through the pandemic. They made big bets that the way people and businesses behaved during the COVID restrictions in 2020 was a permanent shift to a more online way of living.

Microsoft CEO Satya Nadella said in an email to employees that customers were, in fact, also adjusting to a slowing economy and trying to "optimize their digital spend to do more with less."

Zukin says Microsoft is a perfect example of a company that expanded too much too quickly.

Nadella took the company "from 60,000 employees to 220,000. So, they are cutting back on 10,000, which is not too surprising," said Zukin. 

Earlier this year, Canadian tech giant Shopify went through a similar reckoning. During the pandemic, CEO Tobi Lütke made a big bet that e-commerce would "leap ahead by five or even 10 years." 

Shopify doubled its headcount from early 2020 only to be forced to lay off 10 per cent of its staff this summer. 

"Ultimately, placing this bet was my call to make and I got this wrong," he told staff in a memo. "As a consequence, we have to say goodbye to some of you today and I'm deeply sorry for that.... For a company like ours, this news will be difficult to digest."

Since then, the biggest names in tech have followed suit.

But economists tracking employment levels have found those laid-off workers seem to have had little trouble finding new jobs.

"Through December, it looks like a lot of tech workers that were laid off early in the cycle have found new jobs relatively quickly," said Aaron Terrazas, chief economist with the job search site GlassDoor.