Post-Pandemic Layoffs - Companies With the Highest Number of Job Reductions and Reasons Behind

Since the pandemic, layoffs have become common in many companies, particularly those in the technology sector where labor costs are high. For example, in Jan 2024, online retailer eBay -- which cut 500 employees in Feb 2023 -- reduced its headcount by 1,000 employees (roughly 9% of its workforce). To understand the extent of layoffs in big tech companies over the past two years, we referred to layoffs.fyi for historical layoff data. Here are our findings:

• Between Nov 2022 and Q1 2023, the number of layoffs surged by 4.4 times compared to the average from Mar 2022 to Jan 2024.

• Among the companies analyzed, Amazon had the highest number of layoffs. From Oct 2022 to Jan 2024, they had 10 times layoffs, averaging one layoff every 1.5 months. In total, more than 27,000 staff were cut.

• AI and traditional industries experienced the lowest number of layoffs.

• Different factors have led to significant workforce reductions in big tech companies, including rising interest rates, high inflation and a domino effect.

Following the release of Chat GPT, big tech companies experienced a peak in their layoffs

According to Layoffs.fyi, the concentrated period of layoffs at these big tech companies was between Nov 2022 and Mar 2023. During this period, there was an average monthly layoff count of 35,075, which equates to an average of 1,169 employees being let go per day. This figure is 4.4 times higher than the overall average from Mar 2022 to Jan 2024.

Interestingly, Chat GPT coincidentally debuted on Nov 30, 2022, and reached 100 million users by Jan 30, 2023. Its API was also made available for enterprise use on Mar 1, 2023. The rapid development of AI presents prospects for entrepreneurs, and it is possible that some companies used this as an opportunity to reduce their workforce. However, it remains uncertain as the convergence of the layoff peak and the AI's rapid development could be purely coincidental.

Amazon made the largest number of layoffs with 10 separate rounds from Q4 2022 to Q1 2024

According to the data from layoffs.fyi, big companies like Amazon, Meta, Microsoft, and Google, have conducted significant layoffs, with each announcing layoffs of up to 10,000 job cuts.

Specifically, Amazon stood out with the highest number of layoffs, averaging one layoff every month and a half between Oct 2022 to Jan 2024. In total, more than 27,000 staff were cut.

Industries with reduced demand after the pandemic are seeing the most layoffs

According to layoffs.fyi, the most impacted industries include Consumer, Retail, Hardware, Finance, and Healthcare. Conversely, the industries with the fewest job cuts were Education, Energy, Legal, Aerospace, and AI.

During the pandemic, industries like Ecommerce saw rapid growth, but the increased demand for delivery and medical care led to companies hiring too many employees. After the pandemic, enterprises face the challenges of excess employees and low efficiency.

Two industries stood out with the fewest layoffs. The first one is AI, where there is a high demand for talents but a limited supply. The other industry is the more traditional sectors, such as Education, Energy, and Legal, which tend to have a stable supply-demand balance, resulting in fewer layoffs.

Big tech companies are facing a significant number of layoffs, each with their own unique reasons

In late 2022 and early 2023, big tech companies went through a significant wave of layoffs due to several factors. Here is a summary based on our analysis of their annual reports:

• Recession and inflation: Some tech companies cited the poor economy and the discussion of a possible U.S. recession. Rising inflation and living costs led businesses to cut expenses, causing tech companies to reassess and implement cuts if necessary.

• Higher interest rates: The Federal Reserve raised its benchmark interest rates multiple times in 2022 and 2023. From March 2022 to July 2023, the rate had increased from 0.25% to 5.5%. The higher interest rates affected companies' loan applications and consumer spending, making more businesses unprofitable.

• Over-recruiting during the pandemic: With the surge in online shopping during the pandemic, Ecommerce companies hired excessive numbers of employees. However, as the pandemic abated, the demand for online shopping decreased, necessitating layoffs.

• Collapse of Silicon Valley Bank: In March 2023, the collapse of Silicon Valley Bank (SVB) caused investors to become more cautious, impacting the tech industry.

• Domino effect: Layoffs can have a contagious effect. When one big tech company cuts jobs, rival company boards may question why their executives are not doing the same.

• Decreased demand for certain products: In the semiconductor industry, restrictions on chip exports to China issued by the U.S. Bureau of Industry and Security (BIS) hampered sales, impacting the companies' bottom lines. An example is Micron, whose 2023 annual report showed a profit decrease of 49.5%, with profits dropping from $30,758M in 2022 to $15,540M in 2023. This illustrates the impact of international policies on a company's profitability. To survive such challenges, Micron had to resort to cost-cutting measures, including layoffs.

Methodology

We obtained a list from the layoffs.fyi that provides information on tech company layoffs between Mar 11, 2020 to Jan 26, 2024. Then thoroughly analyzed the companies headquartered in the United States.

By tallying the monthly layoff reports, we ranked the companies based on the average number of layoffs per month. This allows us to identify the industries with the highest and lowest layoff numbers.

Additionally, we checked the annual reports of the Top 10 companies with the most layoffs. We also tracked their developments pre and post-layoffs, leading us to conduct an in-depth analysis on the reasons behind the layoffs at major tech companies.

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