For tech industry, 2022 was a year of mass layoffs; 2023 likely to be worse

For the past several days, 42-year-old Rahul Chavan’s (name changed) two children have been asking him why he changed his job. “I don’t know what to tell them,” said Chavan, who is among the 400-plus employees who were recently laid off by global fintech software provider Fidelity National Information Services (FIS) as part of its plan to restructure its business in India.

Chavan had seen it coming. His negotiations with clients on contracts had become much harder. And managers had started hinting at possible layoffs. Chavan acted early and managed to secure another job, but his role isn’t the same. “It’s like learning everything right from level one,” he said.

For the tech industry, 2022 was a year of mass layoffs, with even giants like Meta and Twitter buckling and sacking employees in hordes.

In November, Twitter let go of over half its global workforce to cut costs. In India, the microblogging site slashed its 200-people team to retain just a few of the staff in its policy team. The layoffs in India were across segments: policy, communication, engineering and development.

“It was very sudden. First, I lost access to the system and then I received an email saying those who cannot log into their systems had been laid off,” said a former Twitter employee, who did not wish to be named. “I’ll take a few months’ break and then look for another job.”

E-commerce giant Amazon, too, is letting go of its employees as part of its annual operating planning review. The company, however, did not specify the number of jobs that would be axed in India. Sources said the attempt would be to absorb as many as possible within the various business units of the firm. This wouldn’t be the last of the job cuts, though. In a recent memo to employees, Amazon Chief Executive Officer Andy Jassy said there would be worldwide job cuts in early 2023 as well.

Several Indians working for Amazon in the US have already been impacted. One of them, Raj Kansagra, a software developer engineer, took to LinkedIn in November to say: “I’m joining many others who are experiencing the feelings that come with losing your dream job.” An H1B visa holder, he worked on the company’s virtual assistant technology platform, Alexa, and had been with Amazon for six years.

The tech layoffs this year have exceeded the job cuts the sector faced globally during the financial crisis of 2008-2009 triggered by the Lehman Brothers’ collapse. In 2008, tech firms had sacked 65,000-odd people, and about the same number lost their jobs in 2009, according to Challenger, Gray & Christmas, an outplacement and career transitioning firm.

Compare that with 2022: globally, 965 tech companies have already sacked more than 150,000 people. In India alone, 17,000-plus have reportedly lost their jobs.

From the look of it, the situation is only likely to worsen early 2023, given trying global macroeconomic conditions. Tech majors such as Meta, Amazon, Twitter, Microsoft and Salesforce are expected to lead the job cuts.

The Indian start-up world, too, saw many rounds of layoffs throughout the year. Over 23,000 employees of Indian start-ups have lost their jobs since the pandemic began in 2020, according to the staffing firm TeamLease. And in 2022, amid the funding winter, 44 start-ups, including unicorns, have sacked 15,216 people. The biggest axe fell in the education technology (edtech) world, where 6,898 people were handed the pink slip; followed by consumer services and e-commerce.

The funding chill is impacting late-stage companies more than early-stage firms, experts say. E-pharmacy start-up PharmEasy is the latest to lay off employees, reportedly slashing numbers across verticals: support, quality analytics and product technology.

The Mumbai-based firm has raised a total funding of $1.6 billion from investors such as Prosus Ventures, Temasek and the Nandan Nilekani-led Fundamentum. The employees were reportedly given multiple reasons for the layoffs, including restructuring, macroeconomic headwinds and the Russia-Ukraine war. The losses of API Holdings, which operates PharmEasy, jumped 161 per cent to Rs 4,043 crore in FY22 from Rs 1,552 crore in FY21.

Hospitality unicorn OYO, too, announced plans to downsize 10 per cent of its workforce, and laid off 600 of its 3,700 employees, primarily those in tech roles. The company said it was “making wide-ranging changes in its organisational structure”.

“It is unfortunate that we are having to part ways with a lot of these talented individuals who have made valuable contributions to the company,” Ritesh Agarwal, OYO founder and group CEO, said. He promised to offer opportunities to these workers if the need for their role emerges in the future.

Experts said many unicorns, or start-ups with over $1 billion valuation, are striving to have enough cash to stay afloat for a minimum of 36 months without having to raise additional funds. Some of these unicorns have also resorted to cutting jobs and shutting parts of their operations to shore up their balance sheets.

For instance, SoftBank-backed edtech firm Unacademy recently conducted another round of job cuts and laid off 350 employees or 10 per cent of its workforce of 3,500. Overall it sacked 1,350 employees this year through multiple rounds.

“We are no strangers to the harsh economic conditions that everyone is witnessing these days,” said Gaurav Munjal, co-founder and CEO of Unacademy Group, in a letter to employees. “These are very difficult times for the technology ecosystem. And things are getting worse with each passing day.”

Edtech unicorn Vedantu recently laid off 385 employees, nearly 11.6 per cent of the company workforce, according to sources. The Bengaluru-based firm has laid off over 1,100 employees (both full-time and contractual), so far, this year. Vedantu’s co-founders and a few members of the leadership team have also taken a 50 per cent pay cut.

Byju’s, India’s most valuable start-up, is set to lay off nearly 2,500 or 5 per cent of its employees as part of an “optimisation” plan. The company is also under pressure from lenders who have told the edtech giant to liquidate US assets worth $500-800 million to repay a part of a $1.2-billion loan if the firm is not able to provide the money from its cash reserves, sources said. Byju’s posted losses of Rs 4,588 crore in the financial year 2020-21 (FY21), 19 times more than the preceding year, according to the latest available financial report. The firm earned Rs 2,428 crore in revenue in FY21.

Major tech layoffs in 2022

• Twitter in November laid off 50% of its 7,500 global workforce. The majority of its 200-odd employees in India were fired
• Instagram and WhatsApp’s parent company Meta said in Nov it was laying off over 11,000 employees, reducing its workforce by 13 per cent. The impact on employees in India is not clear yet
• Amazon is planning to lay off 10,000 employees, according to a report in The New York Times in Nov. Amazon will cut jobs again in early 2023. It didn’t specify any India number yet
• In Oct, Microsoft confirmed that it let go of less than 1% of its employees. The cuts have reportedly impacted about 1,000 people
• Alphabet, Google’s parent company, is reportedly gearing up to lay off about 10,000 employees, or 6 per cent of its workforce
• HP Inc plans to cut 6,000 jobs over the next three years
• Salesforce is reportedly preparing for a major round of layoffs that could affect up to 2,500 employees