or, what goes up must come down. Om Malik makes some interesting observations about the wave of tech layoffs we’ve been seeing for the last year or so:
An unprecedented boom in Silicon Valley that started with the once-in-a-generation convergence of three mega trends: mobile, social, and cloud computing, has peaked. It started in 2010, and it has been bananas around here for the past decade or so. The FAANG+Microsoft companies saw their revenues go from $196 billion to over $1.5 Trillion. Let that sink in. Booming stocks helped create an environment of excess like never before.
The companies got into the business of what Paul Kedrosky calls “people hoarding.†The pandemic and the resulting growth revved up the hiring machine even more. The over-hiring of talent has led to wage inflation, which had a ripple effect across the entire technology ecosystem. Technology insiders are happy to tell non-tech companies to use data and automation as tools to plan their future. It is easier to preach than practice.
Why does Google need close to 200,000 employees? Or does Microsoft need 225,000 people? Salesforce, till recently, had about 73,500 employees. Profitable as these companies have been, it is also clear that they have become sloppy and bloated.
While it’s possible to overestimate the significance of a few big companies, it’s just as possible to underestimate. Companies of all sizes and types are competing for the same rather limited pool of talent. It should also be understood that these are individuals in the “professional class”, the same group that includes doctors, lawyers, architects, teachers, and so on. The entire U. S. working age population has about 28 million of them. Other than in the tech sector jobs for those people aren’t increasing in number particularly quickly.
Over 500,000 new jobs. Almost every sector has a correction so maybe that’s what’s going on with tech, but so far not much effect beyond that it looks.
Steve