Startups sprouted from giants – Hi-Tech – Kommersant

Tech corporations are announcing mass layoffs one after another. As a result, tens of thousands of IT specialists remained without work or will remain in the foreseeable future. However, most of them have already turned the situation in their favor and opened their own business.

On Tuesday, March 7, the agency Bloomberg reported that this week Meta (recognized as an extremist organization and banned in the Russian Federation) may announce the reduction of several thousand employees. And this despite the fact that back in November last year, Mark Zuckerberg’s corporation announced the largest staff reduction in its history – by 11 thousand people.

The situation at Meta perfectly describes the trend that has developed in the technology sector: IT corporations, as they began massively laying off employees last year, do not intend to stop.

And in the first two months of this year, almost every week there was a message about mass layoffs in the next technological giant. Apple, Dell, Disney, Ericsson, PayPal, Twitter, Yahoo!, Zoom — here is a partial list of representatives of the technology sector, who announced massive layoffs in February only.

Causes such large-scale headcount adjustments in most companies are the same. During the pandemic, many of them actively hired additional staff to meet the increased demand for their services under pandemic restrictions. But with the removal of quarantines, user demand has noticeably decreased, and the military conflict in Ukraine has led to a significant increase in inflation around the world and a drop in consumer activity.

Many corporations’ business growth forecasts have proven overly optimistic, and executives are now trying to adapt to a much less favorable external environment.

Thus, Zoom CEO Eric Yuan, announcing the upcoming reduction of 15% of the staff, noted that the company’s management “should have spent more time carefully analyzing the size of our staff and assessing whether our growth is sustainable.”

In general, in 2022, companies in the technology sector announced the reduction of more than 97 thousand employees. That’s 649% more than in 2021, according to consultancy Challenger, Gray & Christmas. Taking into account the plans for layoffs announced this year, this figure has grown to almost 150 thousand engineers, programmers and other IT professionals.

Many of those laid off have either already found or will find work in other technology companies. But most decided to work for themselves.

According to surveyconducted by Clarify Capital among 1,000 technology company employees laid off this year, 63% of them started their own business.

The statistics confirm the words of the respondents. According to the American venture fund Y Combinator, which invests in the technology sector, the number of registered startups in 2022 increased by 20%. And in January of this year, the number of applications increased five times compared to the beginning of 2022.

Finally, according to the same Clarify Capital survey, the decision to open their own business for the majority of the laid-off professionals benefited. So, on average, their annual salary in their own startup will be $13,000 more than at their previous place of work. And almost all (91%) of the survey participants have created a business that will directly compete with their past employer.

Kirill Sarkhanyants