GD/WAT Topic - Tech Layoffs: Why is it happening and What does it Indicate?

There could be multiple reasons for Tech layoffs. Students preparing this topic for the GD/WAT section of MBA admission 2023 must include aspects that are analytical in nature and not merely a retelling of facts. By Aritro Dasgupta

The last few months have seen the business world rocked by severe layoffs of employees. This has particularly taken place at tech companies. These layoffs have created an atmosphere of fear and panic among several businesses and market analysts. That is because it was the tech sector that literally kept several businesses alive and ticking during the dark months and years of the COVID-19 pandemic. Tech companies were the ones who employees scores of people and even raised their people requirements through that period. The fear of an impending economic crisis has now gone up, primarily due to the fact that some of the market leaders have been downsizing their employee strength.

Not merely the severity of layoffs, but also the manner has shocked several industry observers. The likes of Meta, Alphabet, Apple, Microsoft, IBM, Cisco and Amazon have been among the great success stories across sectors in the last couple of years, even going back to the pre- pandemic era. Some of these companies mentioned, have also been considered among the best of employers. Their employees have enjoyed some of the best working conditions, where they have found freedom, to develop ground- breaking solutions for different clients. They have enjoyed unlimited perks and working in these companies led to a sort of social prestige, rarely matched by others. And yet, when the axe fell on scores of employees, the brutality hit hard.

Many of those who were removed from their jobs, came to know of it only after they visited their office premises. Some were not even informed directly, but only came to know of this decision, through mass emailers. And this brings us to ponder, why it happened in the first place. There could be multiple reasons for that. Students preparing for the Group Discussion (GD) or WAT (Written Ability Test) section of MBA admission 2023 must include aspects that are analytical in nature and not merely a retelling of facts. Students must be well- versed on data, and must know how to apply the same. Each successful aspirant must be able to draw up certain points that are unique.

Tech Layoffs: Why is it happening and What does it Indicate?

Reasons for these Layoffs

There are of course several reasons for these. Let us take a look at some of the leading causes:

• Hiring has already peaked in the tech sector, so the only way was down, as the numbers had reached an unsustainable sum. This was due to over-hiring during the ‘good days’ of boom.
• There has been an overall downturn in the global economy due to several factors coming together. The Russia- Ukraine war, China’s fresh COVID case overload, the energy crisis primarily in Europe, trade wars and some of the after- effects of the pandemic are some of those factors.
• Automation is cutting down the demand for people, as lots of routine jobs can now be performed by smart machines and bots. Transition is taking place, so newer jobs should emerge over the next couple of business quarters and years.
• The concept of moonlighting, which was seen an unethical and unproductive, led to many employees being sacked on being discovered.
• Leadership changes have affected the morale and working standards of several tech companies, such as at Twitter.
• Privacy concerns and related legal cases have also taken away some of the momentum away from tech giants.

An MBA aspirant must also be able to wade through the minefield of tackling tricky situations during the WAT round. In such a topic as given for example, he/ she must be able to identify what do these early trends indicate.

Key Indications

These layoffs indicate a few major aspects as explained below:

• Due to much automation introduced, a lot of routine tasks not longer need a lot of humans working on them. A transition is on, so newer jobs will be created.
• There is a realistic possibility of much economic gloom over the next few quarters, so companies, economies and individuals need to be vigilant.
• The much hyped VC (Venture Capital) funded model seems to have run its course. Many of the companies that are financially bleeding, are ones that have been beneficiaries of this VC model, but now struggling to stand on own feet.
• The stock market too seems to have turned a tad bit unreliable, leading to many companies’ IPO plans going up in disarray.
• The current time frame demands innovation, across sectors. A lot of existing work practices will need to be debunked in favour of more sustainable and long- lasting practices.

MBA aspirants who are attempting this topic must make sure to include reasonable points that indicate the reality of economic gloom, but must also display positivity. The Indian economy is so far withstanding better than many others of similar size and complexity. This is the time for us to innovate towards environmentally- sustainable goals. Business plans will need to be more holistic and inclusive. Students must come up with more innovative solutions that could take off at this juncture. It must be noted that brands and companies such as the iPhone, Facebook, Airbnb, Uber and Netflix, emerged and grew stronger during the last big global recession, more than a decade back.

About the Author:

Aritro Dasgupta is a Teacher, Trainer and Content Writer. He has taught at several leading colleges and coaching institutes in both India and the UAE. Several of his students have finished in the top 10 of various national level exams such as CLAT, AILET and DUJAT. He is also a prolific content writer, having written for several leading publications in India, while currently, also working for one in the USA.

 

 

 

 

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