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Amazon, Meta, Twitter, Byjus, and so on, everyone is on a layoff rides. But why?

To understand that, we have to go to the pandemic days.

When the COVID hit the world, suddenly the whole economy halted. There wasn’t cash flow anywhere. And to tackle this, US Fed, which is like the bank of banks, just printed more and more money to hand out to the people in the name of stimulus. Which is may calm just the short term situation, as it is simply a greedy approach ;) So there was so much of excess money in the economy suddenly. And that printer didn’t run out of ink for a while as the stimulus packages simply was rolling out so frequently. All these surplus money found it ways to the financial markets (stock, crypto, NFT and what not). People started to spend them in all crazy ways. And when everyone has enough money to spend, there starts the real problem……INFLATION

And the only way to suppress this inflation is to drain that hot and new printed money in the economy is to increase the interest rate. By increasing the interest rates, now everyone has to pay more money for all their loans, credit bills and all sort of debts to the bank. And these banks also have to pay similar kind of interest to the feds. So this is the deal.

So how this is affecting lot of tech employees is, almost all the big tech companies are funded by the big banking houses, Venture capitalist. When the interest rates are low all these funding firms would get cheap loans and would be having so much cash to burn. So they’d be investing in so many companies. And these companies in the name of expansion they will increase their workforce, more than they need and also acquire their small competitors for a hefty evaluation. And these companies have their own pride in paying their employees to keep up with their peers. And when these funding firm, runs out of cash, they force their invested companies to make some.

The easiest way to protect capital is by not spending them. So they would consider their employee wages, and the lifestyle they provide in their work campus as their biggest wallet hole and start firing them. And hence the massive layoffs. Actually it was never a question of why, but just when this is gonna happen.

Despite that, there is also demand and supply for the employee skills in the job market. Right now it is so clear that everyone wants to get the MAANG salary, so everyone want IT jobs, thereby flooding the space with huge supply of this skill. And when there is enough supply, we could find cheap labour. So during the time of cash crunch, if companies could hire 2 or 3 people in the same salary that they were giving to a single employee, it is kind of an obvious call for them.

So I guess the only way to survive this is to keep on adapting to the current trend. There is no such thing as job security. We should always keep ourselves relevant to the company and to the whole industry. I will end this with a popular saying,

“When the going gets tough, the tough gets going”.

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