Ever since tech stocks began slumping last year, the industry — with Meta Platforms Inc., Alphabet Inc., and Amazon.com Inc. being the most prominent companies — has been conducting mass layoffs to right-size headcounts after a hiring binge during the pandemic. Companies were also under pressure to appease investors who became newly focused on profits rather than growth and sizzle. The layoffs cast a pall over the entire labor market, with workers worried about whether the contraction would spill over from the tech sector to other parts of the economy the way they did during the dot-com bust in the early 2000s.
After a year of layoffs, the past month has given us evidence that tech employment is stabilizing, even perhaps turning up a bit. The website layoffs.fyi has been tracking tech layoffs since the start of 2022. After rising through the year to a peak in January, layoffs have declined for three consecutive months. April had about as many layoffs as we saw last October.
With stock prices stabilized and headcounts now at an appropriate level, the theme coming out of tech companies this quarter was all about AI: What it will mean for their businesses and their investment plans for capitalizing on it. I’m agnostic on the merits of the investments we’ll see tech companies make in this direction. After seeing all the white whales the industry chased in recent years, from autonomous vehicles to voice assistants to the metaverse, I’m not so sure investors should feel good about what’s coming, either.
Interestingly, there’s evidence this shift from cost cutting to investing in AI is already showing up in labor market data. The jobs website Indeed.com keeps track of job postings over time, and since the middle of April new listings — those posted within the past seven days — for software developers have risen by 30%. It’s a volatile data series, but the uptick and the timing of it makes sense given the recovery in stock prices and corporate commentary on staffing levels and AI plans.
Disclaimer: This is a Bloomberg Opinion piece, and these are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper