The Truth About the Recent Layoffs in Tech

Disclaimer: This is an excerpt from the 2024 Tech Salary Guide. 

There continues to be a tech talent shortage across the United States, with nearly 4 million tech jobs available. Projections show that the United States tech industry was projected to grow 5.4% in 2023. That said, because of the unease in the market, overall tech salaries saw a very modest increase last year of 2% on average versus nearly exponential growth trends over the past decade.

An important part of the story of 2023 – and what we can learn from it in 2024 – is who was part of the tech layoffs, company and personnel-wise. Accounting for 42% of all tech layoffs this year, FAANG companies (Meta, Apple, Amazon, Netflix, Alphabet) were the biggest sources of job loss. This must be put into context, as these companies, along with Microsoft, have been on a steady hiring spree since 2019. Compared to the number of people hired by these companies since 2019, the layoffs of 2023 only account for 8% of that workforce.

Additionally, tech unemployment stayed near all-time lows of around 2% all year; while tech companies were clearly letting people go in 2023, it was not necessarily tech workers who were looking for new employment. Internal recruitment teams, HR, and marketing were hit harder than tech roles.

Read More: How to Maintain Your Sanity During a Job Search

None of this diminishes the number of layoffs that many had to deal with in 2023. Estimates put the number of tech workers laid off at over 230,000. Those are people who had to deal with the uncertainty of trying to find a new position while reading article after article about how the industry is crumbling. What the middle of 2023 showed is the resiliency of the IT industry and the people inside it.

Of the people who reported being laid off, 79% found a new job within three months. Talent reabsorption continues at an all-time high, and according to our recruiters, people weren’t just taking jobs out of desperation. Instead, many of these job seekers trusted their skills and abilities, were unwilling to take substantial pay cuts, and were comfortable waiting to find a position that best fit their needs.

Additionally, a new contributor to the tech talent gap emerged. If those laid off couldn’t find a role that met their expectations, many decided to make one for themselves by forming their own company. 63% of tech workers who were laid off said they started their own company within 12 months of losing their job, with 93% of that group directly competing against their former employer.

Many of those who started a new enterprise didn’t do it due to a lack of other options, with only 23% saying they were having difficulty getting hired, but rather to either grow their skills, make more money, or just create something new.

Considering the events of 2023, the demand for high-quality tech talent has never been higher. On the business side, as 2023 progressed, concerns about hyperinflation were proven unfounded in the United States, and interest rate hikes began to slow. Many companies in the S&P 500 beat Wall Street expectations, growing revenue and expanding profits.

Despite the concerns last year, the tech industry is stabilizing and still one of the best sectors to work in the United States economy. For those in the IT industry looking for work after being laid off or to progress in their careers, there are steps they can take to improve their candidacy during their search. These include upskilling, seeing how new advancements in technologies (like artificial intelligence) are impacting their profession, and possibly compromising with employers when it comes to remote work.

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