Tech Layoffs: What's The Right Approach?

For the past eight months, tech companies have shifted focus from a relentless pursuit of growth to profitability and cost structure optimization. Tech valuations continue to slide due to macroeconomic pressures including inflation, higher interest rates, and reduced enterprise spending. At the end of January, software valuations were 30-40% below 2021 highs, and companies are struggling to generate positive cash flow from operations.

Effectively, the market is resetting itself post-pandemic. This process has yet to find its resting point, so now is the time for tech companies to future-proof their business models.

Many in tech responded to these pressures through headcount reductions. Last month alone (January 2023), over 200 tech companies announced job cuts. Monthly tech layoffs averaged 170 companies per month from June 2022 to January 2023.