In one week, January 2023 became the second-largest layoff month since Crunchbase News began tracking job cuts in the tech industry last year.
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Large tech companies including Amazon, Salesforce 1 and Stitch Fix have slashed around 16,420 employees from their ranks. The last time we saw cuts that deep was in November, when the month ended with around 44,570 U.S. tech sector employees who had been let go.
But January isn’t over yet. After a brief break from layoffs during the winter holiday season, it looks like the large tech companies that spent most of the pandemic stockpiling talent amid a software engineer shortage are back to carving out large chunks in their payroll.
Where are these layoffs coming from?
Startups saw the writing on the wall in 2022. The majority of U.S. tech sector layoffs last year were driven by early-stage startups and a handful of mature, late-stage startups such as Gopuff, Klarna and Stripe, all of which conducted multiple layoffs throughout the course of the year. We’ve also seen around 23 companies (all private) shutter in the past year.
But while the data shows there were fewer public companies than startups conducting layoffs last year, those large businesses laid off more people in total — just take a look at November. Large tech firms made up less than 50% of the number of companies that announced layoffs, yet the likes of Twitter and Meta laid off the lion’s share of tech workers that month. Per Crunchbase data, public companies were responsible for around 75% of all layoffs despite making up 28% of all tech firms that announced layoffs.
What will the 2023 tech labor market look like?
It’s important to note that January typically is the most brutal month for layoffs, with job cuts hitting every sector from retail to business to technology.
That might explain the record-breaking numbers we’re already seeing in the first week of 2023. But for the first time since we’ve been tracking layoffs, the number of public companies announcing workforce reductions has eclipsed those in the private market. While that may not be the case week over week, the majority of layoffs well into the first half of 2023 will come from public tech firms.
“A lot of the startups kind of started to take medicine earlier in the year, and it’s the big companies that are doing it now,” Healy Jones, an executive at startup consulting firm Kruze Consulting, told me back in December.
Illustration: Dom Guzman
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