The tech industry continues to experience a bloodbath with major companies like Facebook (now Meta) and others laying off thousands of employees. In 2023, Meta fired over 11,000 employees, despite its stock price soaring 194%. At the same time, they laid off 21,000 people. Google’s parent company, Alphabet, hit record profits and laid off 12,000 people, while Microsoft, valued at over $3 trillion, cut 10,000 jobs. Despite these layoffs, the average salary for software engineers is at an all-time high, and tech unemployment has doubled in the last year. Today, we will break down the numbers behind the tech job market and explain why these jobs may never come back.
Unstoppable Growth and Sudden Contraction
To understand the impact of one bad year on tech’s unstoppable growth, we need to look at its massive and consistent expansion over the decades. In 2000, Google was a startup with 40 employees. By 2010, they had 24,000 employees, and by 2020, they had 135,000 employees, peaking at 190,000 in 2022. Amazon had 9,000 employees in 2000 and grew to 1.6 million by 2021. Meta had 2,000 employees in 2010 and reached 87,000 by 2022. Microsoft went from 39,000 employees in 2000 to 221,000 by 2022.
This rapid expansion was driven by various technological revolutions, including the internet becoming mainstream, the mobile revolution, cloud computing, and the pandemic forcing companies to go digital. Each wave created new industries, products, and job categories, fueling exponential growth.
The 2022 Market Contraction
However, in 2022, tech saw its first real market contraction in over two decades. The zero-interest rate period had rewarded growth, but when inflation skyrocketed and interest rates went up, the NASDAQ dropped 33%. This decline revealed that tech’s growth was not solely built on innovation but also on a specific kind of math that required continuous, uninterrupted growth. The abrupt halt in growth triggered a domino effect, raising questions about the future of tech employment.
Education and the Job Market
During the tech boom years, the message was clear: learn to code and get a six-figure job. The education industry restructured around this promise. Universities couldn’t admit computer science graduates fast enough, and the number of CS graduates nearly doubled from 2015 to 2020. Coding boot camps emerged as a faster alternative, promising high-paying tech jobs after short, intensive courses.
From 2016 to 2023, the number of coding boot camp graduates increased from 18,000 to almost 60,000 per year. However, when tech hiring froze in 2022, the boot camp bubble burst. Schools like Lambda School and Flatiron School faced significant layoffs and pivots. While boot camps struggled, specialty master’s programs thrived, with international graduate enrollment increasing by 21% in 2022 and 22% in 2023.
The Supply and Demand Imbalance
The education system built for infinite growth is still producing graduates at peak capacity, but the jobs it was built for have vanished. We now have record numbers of CS graduates competing with thousands of boot camp graduates, expanding master’s programs, and more people entering these programs as jobs become scarcer. This has created a supply-demand imbalance, making it more competitive for every job.
The Freezing of Job Openings
Even as tech companies hit record profits, their headcount in 2024 is still below 2019 pre-COVID levels. The job market has frozen, with senior engineers who survived the 2022 layoffs sitting on golden tickets, enjoying record compensation levels due to stock grants given during the market bottom. This has made tech unemployment worse for everyone else, as the normal cycle of job openings has stopped.
AI and Outsourcing
Companies are planning for a future where they need fewer engineers. AI tools like GitHub Copilot are making developers 55% faster at completing coding tasks, allowing companies to do more with fewer engineers. Additionally, the rise of remote work has led companies to consider outsourcing to cheaper labor markets. The worldwide business process outsourcing market is expected to grow significantly, changing how US companies approach engineering talent.
Conclusion
The tech job market faces unprecedented challenges, with a record number of new graduates entering a market where the demand for jobs has fallen. The freezing of job openings, coupled with the rise of AI and outsourcing, suggests that the future of tech employment is uncertain. Companies and job seekers must navigate this complex landscape, balancing innovation and cost efficiency.
FAQs:
Q1: Why are tech companies laying off employees despite record profits?
A1: Companies are focusing on maintaining efficiency and reducing costs by cutting management layers and leveraging AI tools.
Q2: How has the education system contributed to the job market imbalance?
A2: The education system built for infinite growth continues to produce graduates at peak capacity, but the demand for jobs has fallen, creating a supply-demand imbalance.
Q3: What impact has AI had on the tech job market?
A3: AI tools like GitHub Copilot have made developers more efficient, reducing the need for as many engineers.
Q4: How is outsourcing affecting the tech job market?
A4: The rise of remote work and outsourcing is leading companies to consider cheaper labor markets, changing how they approach engineering talent.