Why Are Tech Companies Laying Off Workers?

With high salaries, attractive perks, and career growth, the tech industry is considered the best industry to work for. But over the last few years, perceptions have changed. An industry that was considered the most secure and offered abundant opportunities is now affected by downsizing. With mass layoffs going on since 2022, job seekers are doubtful about which career path to take. Let’s find out why tech companies are laying off Tech workers?

But what led to this wave of layoffs? The reason is not one but many. In this article, we will look into the factors that are driving these layoffs. We will also discuss the steps that will help you secure your job and not become a victim of the current layoffs.

Tech Employees Impacted By the Layoffs

The tech industry’s layoffs started in late 2022 and haven’t stopped yet. According to Layoffs. fyi, a website that monitors job cuts, 1,186 tech companies laid off 262,682 workers in 2023. In 2024, the number dropped slightly but was still huge, with 152,104 employees cut across 547 companies. By July 2025, 150 companies had already let go of 72,808 workers, with big names like Microsoft, Google, and Intel leading the charge.

Some of the biggest layoffs came from the largest companies by market cap. In 2023, Meta (the parent company of Facebook and Instagram) cut 21,000 jobs. Amazon slashed 14,000 jobs in 2024, and Microsoft laid off 9,000 workers in July 2025 alone. Intel cut 15,000 jobs, which is 15% of its workforce, in 2024, and this year, it has removed over 2000 employees. The most affected are the ones working in its manufacturing sector. Smaller companies, too, have laid off several employees. Bumble, the dating app, cut 240 workers in June 2025. Additionally, Automattic, the maker of WordPress.com, laid off 270 employees in April 2025.

Why Are Tech Companies Cutting Jobs?

Tech layoffs aren’t happening because the industry is failing. Most of these companies are making huge profits. As per reports, Microsoft, Google, and Meta are sitting on billions in cash, and their stock prices have also climbed in 2025.

Microsoft earned about $25.8 billion in profit in 2025, 19 percent more than the previous year. Alphabet’s profit jumped by 46 percent, while Apple’s profit rose 5 percent. Companies like Meta and Amazon also saw a growth in profits, each earning 35 percent and 9 percent more than the same time last year.

So, most likely, money isn’t the problem. The issue is much more complex and goes beyond profits. Strategic planning, advances in machine learning and artificial intelligence, and economic growth have all contributed to the layoffs. Let’s discuss in detail.

Companies Over Hired During the Pandemic.

When the COVID-19 pandemic came, there was no way but to adopt digitalization. Due to the lockdown in most parts of the world, people stayed at home. They could not go to stores and had to shop online. While sitting idle, they watched movies and shows on streaming platforms like Netflix, YouTube, etc.  Working from home also became a necessity, resulting in a demand for platforms like Zoom, Google Meet, etc.

This sudden lifestyle change resulted in a demand for online products and services, and companies started hiring professionals to keep up with the demand.  For example, Meta doubled its workforce from 48,268 in 2020 to over 80,000 by 2022. Amazon, Google, and others also hired more people to capitalize on the boom.

But this online boom did not last long. When everything started to open, people went back to their normal routine of shopping offline, working in offices, etc. The revenues of these companies also went down, and now they had to cut down the costs. The over hired employees were asked to leave to stay profitable, as they became an extra burden.

Slow Economic Growth

Companies also lay off due to the economic challenges, and the US economy is currently facing problems like inflation, shifting tariffs, and rising treasury yields. To control inflation, the Federal Reserve raises interest rates. This results in a slowdown of business growth as it’s expensive for the companies to borrow money. The most affected are the startups, and they have to reduce the headcount and cut costs to survive.

At the same time, increased tariffs also cause businesses to slow down their investments and hiring, leading to layoffs and a lack of employment.  Another reason is the rising treasury yields.  When yields go up, companies see it as a risk. They fear the economy may slow down, and borrowing will not be cheap. As a result, they avoid spending or investing too much and may lay off their employees instead.

Advances in AI and ML

Artificial intelligence (AI) has been a game-changer technology, but is considered to be one of the biggest reasons for shrinking jobs and layoffs. AI is making many jobs redundant, and companies don’t feel the need to hire people for jobs that AI can do. As a result, employees in low-code jobs and jobs without specialized skills are shown the door.

In 2025, Microsoft CEO Satya Nadella said that at present, AI is writing 30% of the code for some of the company’s software projects, with an aim to push the figure to 95% by 2030. Meanwhile, Salesforce reported that AI handles 30–50% of its workload, a shift that contributed to the layoff of 1,000 employees this year.

Middle managers are also on the layoff risk. Google used AI to write over 25% of its new code, reducing the need for mid-level software engineers. SAP, a German software giant, cut 8,000 roles in 2024 to focus on AI integration. As Mark Zuckerberg of Meta said in 2024, the company is “raising the bar” on performance, targeting “low-performers” for layoffs. This often means managers or employees with outdated skills.

AI is automating tasks that humans used to do. So, now the competition is not from other humans but with machines.

Outsourcing and Cost-Cutting

Outsourcing is another factor contributing to  American employees being laid off.  The H-1B visa scheme was created to help U.S. companies hire skilled foreign workers in fields where there weren’t enough qualified Americans. But over time, many consulting and outsourcing companies started misusing the program.

India-based companies like Infosys, Cognizant, and TCS started bringing in thousands of junior-level workers from overseas and paying them less than American workers. These foreign workers sometimes replace U.S. employees in the same roles.

Companies also prefer to hire overseas workers as it is cost-effective and lowers expenses. Offshoring of jobs leads to fewer jobs for American workers and more offshoring of jobs to countries with cheap labor.

Automation Taking Over Humans

Automation is also replacing people from jobs, leading to layoffs. “Many companies are now using robots and software for tasks like assembly, packaging, and inventory management. Using machines saves time and reduces the need for employees.

Amazon, for example, uses robots in its warehouses and AI for inventory forecasting, cutting down human workers. In 2024, General Motors laid off 200 workers at its electric vehicle plants, mostly in battery pack manufacturing, because of automation. These tools make work more efficient, and companies feel they should use tools rather than hire employees, as it is cheaper.

The Shift to Remote Work

The pandemic made remote work a necessity and changed the whole employee-employer equation. Employees started liking the remote work due to its benefits. So, when the offices opened, they resisted. However, it also gave the companies an opportunity to hire from overseas and remote locations, reducing the need for a local workforce.  The shift to remote work exposed which roles could be automated or outsourced, reducing many jobs.

How to Tackle the Layoff Wave?

So far, we have covered how the sudden layoffs are the result of many factors. But the relief is that the tech industry is still a flourishing field for making a career. To avoid layoffs, you need to stay ahead of the curve. Now skills matter the most.  You need to have an edge and be able to prove your value to the employer so that they hire and retain you.

Here are some tips to improve your chances amidst layoffs.

• Learn AI Skills: AI is a powerful technology that is ending jobs but also creating many. So, embrace it and learn how to use it for your benefit. Take courses on ML and AI so that you can get ready for jobs that require building or training AI systems. Chris Daden of Criteria Corp. says, “Engineers who can architect, integrate, and evaluate AI systems” will be in demand in the future. So, be ready to compete for these roles by training in AI.
• Focus on In-Demand Skills: Cybersecurity, cloud computing, and data analysis are hot fields. A 2025 Chadix study found that laid-off tech workers who transitioned to roles like artificial intelligence or data science landed six-figure jobs. Upskilling in these areas can open new doors. Job placement programs such as those offered by SynergisticIT are a great way to gain expertise in the technologies and draw the attention of recruiters.
• Stay Flexible: Companies value workers who can adapt. Learn about new programming languages, automation tools, etc. This will add great value to your profile. During a layoff, your adaptability will help you take on jobs that may not match your experience but your skills.
• Build Soft Skills: AI can’t replace critical thinking, communication, or collaboration. As George Denlinger of Robert Half notes, “human skills” will always be in demand. Sharpen these through teamwork or leadership training.
• Use your networks: Networking in your circle during a layoff can be extremely beneficial. You can send a message or ping your connections on LinkedIn or Facebook with your resume. Make your intentions clear about seeking a job opportunity and your willingness to work.
• Update your LinkedIn profile: Make sure you have updated your LinkedIn profile. It should contain all the necessary information, such as your skills, experience, projects, certifications, etc., so that when a recruiter is looking for a candidate matching your profile, you appear first on their search engine result.

Conclusion

The current layoff trend gives many hints about how the industry will function in the future. Data reveals that companies will put emphasis on automation and AI, investing heavily in them. Amazon, Alphabet, Meta, and Microsoft are geared to spend a record $320 billion on AI and data centers in 2025. That’s an increase of about 39% from the $230 billion they spent in 2024.

While the job market in some areas contracts, the demand for skilled workers will remain strong, especially in AI-related technologies. The entry of AI has changed the whole scene, and it’s important for job seekers to build and rethink their careers around the technologies of the future.

SynergisticIT may be your ideal launchpad to design and restart your career. With our specialized tech training, mentorship, job support, and placement assistance, you can navigate the layoff with confidence.

Since 2010, SynergisticIT has helped 1000’s of job seekers thrive in the tech industry. At SynergisticIT, we make candidates work on technologies and skills our clients demand.

Our unique approach goes beyond training, offering hands-on project experience. We also have a marketing team to promote your skills, so you don’t have to. Check out our candidate outcomes page to see the success stories.

 

Furthermore, we have a vast network of clients with whom we can introduce your resume. Since we have been in business since 2010, our brand name association increases your chances of being considered by potential employers. Please visit our Transform Your Future with SynergisticIT | Candidate Outcomes page to learn how we have helped Tech job seekers and how we can jumpstart your tech career!