Job Cuts Ripple: Nike, Cisco, Snap announce workforce reduction, adding to ongoing wave tech industry layoffs.

The technology sector has commenced 2024 with a renewed round of workforce reductions, further trimming down after extensive layoffs in the preceding year. According to Layoffs.fyi, a startup diligently monitoring industry job cuts since the onset of the pandemic, approximately 34,000 tech professionals have faced job losses this year.

Job Cuts Ripple

Cisco, Nike, and Snap Inc. are the latest companies to exemplify this trend, disclosing their decision to reduce its workforce. Cisco revealed its plans to trim its workforce by roughly 5%, equating to approximately 4,250 jobs. This strategic move, anticipated over the weekend and reported by Reuters, underscores the company’s deliberate decision-making process.

Nike is planning to lay off 2% of its current workforce, cutting more than 1,500 jobs as it looks to reinvest in its growth areas and streamline its business. Paramount Global, amid a swirl of M&A discussions, is laying off about 800 employees worldwide, an estimated 3% of its headcount, as it looks to trim costs. Earlier this month, Snap slashes 10% of its employees worldwide while software firm Okta Inc. also announced a staff reduction of 7% to curtail costs, affecting around 400 employees.  

Notably, prominent players in the Big Tech arena, such as Amazon.com Inc., Salesforce Inc., and Meta Platforms Inc., have also joined the list of companies implementing workforce adjustments.

Why tech layoffs showing no signs of slowing down.

In 2024, tech companies are still adjusting for over-hiring during the pandemic surge, with the prolonged high interest-rate environment and tech downturn lasting longer than anticipated, as highlighted by Layoffs.fyi founder Roger Lee.

He identifies two primary waves of job cuts in recent years: the “early Covid” spike from the first to second quarters of 2020 and the ongoing “interest rate hike” effect since the second quarter of 2022. Lee notes that this year’s layoffs are generally smaller and more targeted compared to those a year ago.

While economic factors are the primary drivers of tech layoffs, the race for artificial intelligence is also cited as a factor, with companies redirecting resources towards AI talent. According to CompTIA’s analysis, job postings in “artificial intelligence or requiring AI skills” increased by approximately 2,000 from December to January, reaching 17,479.

While the industry is reducing positions in certain areas, it is simultaneously exhibiting robust hiring trends in others. In January, there were 33,727 active job postings, marking the most substantial month-over-month increase in the last 12 months, according to CompTIA.

Bert Bean, CEO of the staffing company Insight Global, is optimistic about the trajectory, stating, “I do feel like most of the layoffs have happened, and companies are going to start to rebound.” However, he acknowledges the prevailing uncertainty, anticipating the market to remain in this state for the next two quarters until the Federal Reserve decisively adjusts interest rates.

Mark Zuckerberg explains why tech layoffs are happening. It’s not because Of AI

Meta has announced several rounds of layoffs as part of Mark Zuckerberg’s “year of efficiency” in which thousands of employees lost their jobs in the past few months.

Meta’s CEO, Mark Zuckerberg, addressed the ongoing trend of tech layoffs, attributing it to companies recognizing the advantages of operating in a more streamlined manner.

Speaking on the Morning Brew Daily’s podcast, Zuckerberg highlighted that businesses are still adapting to the post-pandemic landscape, inevitably leading to difficult decisions. In discussing his leadership style, he emphasized a hands-on approach, expressing a preference for limited delegation. These remarks come amid a broader trend, where not only industry giants like Google, Amazon, and Microsoft are downsizing, but smaller fintech companies and startups are also adjusting their workforce.

“In terms of the layoffs and such, I actually think that was more due to companies trying to navigate Covid,” stated Mr. Zuckerberg in response to a question about whether tech layoffs are linked to the AI boom.

And this is not that companies are shrinking their employee size because of over hiring, but they are now realizing that there can be benefits to being leaner, the Meta CEO added.