Firms all throughout the world are battling economic recession. Consumer spending is sluggish, central banks are raising interest rates, and foreign currencies are strong, all of which point to a potential recession. As a result, tech companies like Apple, Meta, and Amazon are reducing staff or halting hiring to keep the ship afloat resulting in mass layoffs.
In the third quarter, the Indian IT industry and Silicon Valley experienced a wave of layoffs. According to a recent count by Crunchbase, which offers insights into the current state of business, US-based IT companies had let go of more than 45,000 employees as of October 2022. These layoffs include Twitter’s most recent round of mass layoffs, which affected about half the company.
In India, conditions are comparable. According to the website inc42.com, 15,708 people nationwide have lost their employment. According to the data, 44 firms, including unicorns like BYJU’S, Chargebee, Cars24, LEAD, Ola, Meesho, and MPL, have laid off employees.
Let’s examine the mass layoffs by tech oligopolies so far this year in more detail.
1. The economy is uncertain
The tech industry, which is home to some of the most valuable corporations in the world, has started to see job layoffs and hiring freezes only because the economy is uncertain. This, indeed, is bad news for the entire economy.
2. Inflation is rising
IMF managing director Kristalina Georgieva recently stated that there were indications that the global increase in consumer prices since the Covid epidemic and exacerbated by Russia’s war in Ukraine, was nearing its peak.
The head of the International Monetary Fund suggested that global inflation may have peaked, but she also cautioned that a breakdown in global supply systems put consumers in danger of ongoing pressure from growing living costs
3. A looming recession
Businesses are facing more difficulties. Also, a number of reliable sources of information on economic matters are revising their forecasts. Moreover, predicting a global recession.
Markets and financial institutions are consequently exercising greater caution. Many people are concerned as living expenditures grow.
4. Consumers are not ready to spend
Due to an uncertain economy, rising interest rates, and no job security, consumers are not ready to spend money.
As most businesses have started getting back on track since the pandemic, consumers are finally focusing on savings which are resulting in losses to quite a few giants
5. High-interest rates
It is getting harder for borrowers to pay larger equivalent monthly installments (EMIs) for loans obtained since interest rates are rising throughout the financial sector.
They might therefore need to alter their plans for managing their cash.
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The worst appears far from over for the Big Tech companies as the US Federal Reserve struggles mightily to contain increasing inflation, and global macroeconomic circumstances have yet to accelerate on the road to recovery.