Technology Layoffs: Preparing For A Major Reset?

THAT ALL IS NOT WELL with the technology sector globally is an understatement. Marquee names from Google, Amazon and Meta to Twitter, Microsoft, Salesforce and Netflix have been undertaking significant layoffs in November. This has created the inevitable uproar in media and a sense of anguish all around.

- Prabal Basu Roy

But should we be surprised? Firstly, the signs of an all-around disruption across industries has been evident for a few years now. For example, robotics is set to disrupt the manufacturing industry with significantly lower cost of operations, including doing away with managing the inherent complexity of laws, social issues, etc. when compared to humans; 3D printing on scale would be technically feasible in the next 20 years; a healthcare revolution is on hand through genome sequencing, the congruence of cloud and sensors, and the emergence of healthcare platforms enabling predictive healthcare and AI- based physicians; solar energy will be cheaper than the grid soon and radically transform the fossil fuel industry; open networks and the all-pervasive public WiFi will prompt a communications disruption. Many more examples abound.

Secondly, on the other hand, funded by cheap money, PE players have taken massive bets on such transformational technologies with valuations of Big Tech companies ballooning into trillions of dollars; salaries of tech workers are at an all-time high and exotic tech-driven asset classes like cryptocurrencies have redistributed new wealth to investors and ordinary people alike. Now with the collapse of the second largest crypto exchange, FTX, many asset classes run the risk of a domino effect, though it may be better contained than in 2008, as cryptos were still a relatively insulated asset class with low single-digit allocations globally.

Macro-economic Factors