The wave of layoffs that saw three global tech giants lay off a total of 15,820 employees in less than two weeks has raised concerns among Nigerian tech companies.
These concerns are not unfounded, as more tech companies continue to downsize, albeit quietly.
From Stripe to Twitter to Meta, the tsunamis of layoffs have left many tech workers singing a dirge on various social media platforms for weeks. And by all indications, that’s just the beginning, as more tech layoffs are projected to follow between now and the first quarter of 2023.
US retail giant Amazon has already confirmed it is laying off some 10,000 of its staff as well, and reports say the company has started the process with a memo to all its workers preparing them for the tsunami.
Worrying figures: According to the startup layoff tracking website, dismissal.for your information, a total of 814 technology companies have laid off 128,865 employees so far this year. Recall that Stripe, the American fintech giant, had announced 1,120 staff cuts earlier this month, representing 14% of its workforce.
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Twitter, which was recently acquired by Elon Musk, also cut its employees by nearly half, laying off 3,700. The biggest announcement, although not by percentage of the workforce, came last week from Meta, which laid off 11,000, 13% of its workforce.
In addition to those 3, US cloud-based software company Salesforce also announced this week that it will lay off an undisclosed number of workers, reportedly in the hundreds.
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With these developments, there is growing concern not only for the tech workers who have been thrown into the job market, but also for Nigerian tech employees.
constant factor: One thing that has been a consistent factor of the top 3 layoffs is that tech companies overhired in the last 2 years. And the hiring frenzy of the past was fueled by the COVID-19 pandemic, which created a revenue bubble for tech companies. The reality now, according to the tech giants, is that the workforce can no longer be sustained and they have to cut costs, by all means, to stay afloat.
Concerned Nigerian Tech Employees: For many employees working in the tech space in Nigeria, the redundancy issue is no longer a question of if, but when and who will be affected. An employee of Paystack, a leading fintech in Nigeria, which was acquired last year by Stripe, who did not want to be named for fear of being a victim, spoke to Nairametrics about his concerns. He said:
- “Our organization is not insulated from the global economy and many of us have been concerned, even before the news of mass layoffs by big tech companies began to break, that the layoffs could happen at any time. Recent events only confirmed our fears, and while our organization has yet to communicate anything about it, some of us are already working on a plan B.”
Another tech worker who simply wanted to be identified as Oluwaseyi said:
- “Tech layoffs are already happening in Nigeria, they are not as pronounced as those in global tech companies. Many companies are suffering from the poor economic situation in Nigeria; high inflation, volatile exchange rate, etc. I know it can happen to me or any of my colleagues too because things are not moving as they should, the company is not making money as before and they also need to satisfy their investors. .”
There is no escape: The co-founder of Tech4Dev, a non-profit organization that is building entrepreneurs through digital skills, Oladiwura Oladepo, said layoffs are already taking place in the Nigerian tech space, though not on a magnitude that could be described as a tsunami. While he pointed out that the same factors affecting global tech giants are affecting Nigerian tech companies, Oladepo said there is no way Nigerian companies can escape layoffs.
- “The same global recession is affecting everyone. It is also affecting all organizations within the Nigerian space. There is no way Nigerian tech companies can escape this tsunami of layoffs.
- “Think about it, the big global techs are the ones with the muscle to hire a lot of people and if they are laying off at this massive rate, Nigerian companies are no better. Inflation in Nigeria has risen from 11% to around 21.63% now. So there is no way Nigerian tech companies can escape layoffs. I know of a couple of organizations in Nigeria that have been laying off quietly.
- “But people don’t know it because it’s not loud and these organizations aren’t as big as Flutterwave. They are laying off and those who are not laying off are already implementing a hiring freeze and some are reducing the number of new hires. But what is happening in Nigeria cannot be described as a tsunami because they are not that massive.” Oladepo said
According to Mr. Bello Muritala, founder of SalesUltimo, a chatbot and social media marketing software as a service, layoffs are likely among tech companies in Nigeria because some of them are overburdened. He said:
- “Many Nigerian startups, once they raise funds from investors, will start hiring more than they need. This has caused many of them to be overstaffed. With the current economic realities and slowdown in funding, there’s no way many of them won’t downsize. Some of them are also overpriced and this is the time to get them the right size.”
Adjustment time: According to Microsoft Dynamics 365 General Manager Nikesh Parekh, the world is now experiencing a technology recession. Explaining the recent mass layoffs by tech giants, he said:
- “We are feeling the turnaround in technology investments. In 2020, all of these companies felt the tailwind of COVID that accelerated digital investments for the home economy. That has turned into overinvestment in technology from a customer perspective and too many tech employees at most big tech companies. When creating their budgets and forecasts, all of the technology CFOs and CEOs drew a beeline on 25-40% revenue growth in the future. Now, revenue growth has slowed or contracted sharply and all technology companies must adjust to reality.
Suggesting that there will be more layoffs as other tech companies will want to take advantage of the current trend to reduce their number, Parekh said:
- “I think tech CEOs are taking advantage of a time when there are massive layoffs in the market to trim the fat and get rid of underperformers. It’s easy for tech CEOs to get fired just because everyone else is getting fired.”
For Mr. Adewale Adoye, IT expert and CEO of Chronix Technologies, technology companies are adjusting to current economic realities and this is because they have overreached in the last two years.
- “Tech companies embarked on a hiring spree during the pandemic to double their workforce. But with higher inflation today and a recession just around the corner, they have to adjust. Unfortunately, the layoffs may be far from over. While there may be some level of calm for the remaining days of this year, the tech industry may see more mass layoffs in the first quarter of 2023 as companies continue to adjust.” he said.