Almost daily we get headlines for company X laying off Y people, Y being usually large-ish.
Is the IT industry bracing for a rapidly coming recession? Or is it just a trend that’s being utilized to cut excess personnel off as a generally good business practice, but without doomsday clouds on the horizon?
With near-zero interest rates, this is fine for a while: it lets companies gain market share (at least until saturation).
But once interest rates go up, investors start expecting higher returns on their capital, so they divest from high P/E growth opportunities towards more cash flow (like government bonds or companies already grown and now exploiting their position).
And with less capital you have less of a budget to keep people on payroll.
Market corrections usually align with catalysts (e.g. major war and crypto crash). Things can stay overpriced or underpriced for years until there's a catalyst.
Speculative spend for startups and service companies which is investor drive may be down for the various reasons mentioned e.g. interest rates. Would be interesting to see if this is primarily in the US as for instance Europe has way less startup / tech sector anyway.
Personally, it seems like all the news is "lay offs" but all of my unsolicited emails are recruiters. Maybe Big Tech are on an efficiency drive but smaller places are on a hiring blitz?
2) Many economist predict that this downturn will hit high/middle salaried jobs harder then low salaried jobs. This is due to demographic, social changes and simple fact that cutting few well paid jobs bring much more savings for companies.
There won't be thousands of jobs left in say construction or farming...
20-50% compounded growth rate of employee numbers were never sustainable in the first place. FOMO in corporations is a real thing - when your competitor is doing something, you do it too.
Trees don't grow all the way to the sky.