Tech layoff wave loses momentum

It's the interface between Wall Street and the job center: layoffs at tech companies. After the horror year on the stock market in 2022, the old reflexes kicked in at big tech at the turn of the year: To signal to investors that company bosses had understood what the hour had struck, layoffs were made on a grand scale in 2023. Meta CEO Mark Zuckerberg took the most rigorous approach when he declared 2023 the "Year of Efficiency" and ended up laying off 22% of the workforce. Wall Street applauded and sent Facebook shares up by more than 500% from their 2022 low of 88 dollars to their previous record high of 542 dollars a few weeks ago.

The rally is not an isolated case: Big Tech shares have seen huge price gains over the past year and a half. Layoffs are therefore no longer a major issue to keep investors happy. Accordingly, the number of redundancies counted in 2024 is down on the previous year. While the tech industry portal Layoffs.fyi recorded 60,000 redundancies at American technology and internet companies in the USA from the start of the year to the beginning of July, the financial portal Stocklytics has counted around 100,000 redundancies in the tech segment worldwide to date.

Tesla with the largest redundancies among the "Magnificent 7"

The largest number of redundancies took place at the beginning of 2024. Tesla, the world's most valuable car manufacturer, shocked everyone at the beginning of the year and in the spring with repeated waves of redundancies, which ultimately resulted in 14,500 jobs being lost. The German flagship software group SAP also surprised its employees at the beginning of the year with bitter pink slips: 8,000 jobs will be cut this year at Europe's second most valuable technology group after ASML. Of these, 2,600 jobs are in Germany.

The resurgent hardware manufacturer Dell, whose share price has risen by more than 80 percent since the beginning of the year, also announced a major round of redundancies at the end of March, laying off 6,000 employees and reducing its workforce by 5 percent. Cisco and Toshiba are also among the largest tech companies with the most redundancies; over 4,000 employees each had to leave the companies. Even the world's most valuable company for a long time this year made several redundancies: technology giant Microsoft laid off almost 3,000 employees at the beginning of the year to establish a sustainable cost structure.

AI remains a threat to the workplace – IBM shocks

As manageable as the latest rounds of redundancies may still seem, the extent to which optimization processes are being carried out in the world of work using artificial intelligence (AI) is being viewed critically. While almost all (big) tech companies are currently investing heavily in the development of AI, others are already replacing their human workforce with AI and openly communicating the move. Google, Dropbox and, above all, IBM have announced redundancies in connection with AI initiatives.

Computer pioneer IBM in particular shocked its own employees last year by announcing its intention to replace almost 8,000 jobs with AI. At the end of last year, IBM CEO Arvind Krishna also told CNBC that the company was "massively upskilling all our employees in AI". It sounded more like a threat than a reassurance.

In the spring, IBM specified which divisions would be affected by the AI-related layoffs, echoing the basic suspicion of the ChatGPT era: skilled workers are becoming more expendable, especially in the areas of communications and marketing.

(mack)