The wave of layoffs seems to be continuing unabated as thousands of professionals have lost jobs in August. This month saw the highest number of layoffs since January, when 34,107 people were laid off from 122 companies. In August, 44 companies collectively laid off 27,065 of its staff. While August saw a significant rise in job cuts, July reported 39 companies firing 9,051 staff as reported by layoffs.fyi, a portal that keeps track of layoffs in real-time. The significant rise is due to the major job cuts announced by Intel and Cisco. Intel let off as many as 15,000 of its workforce, while Cisco axed 5,900 jobs. Intel and Cisco were followed by Infineon which axed 1,400 jobs, 1,000 jobs by IBM, and 800 by online food ordering platform Skip The Dishes. Here’s a deep dive into what happened in August. Intel is laying of thousands of its staff On August 1, Intel CEO Pat Gelsinger sent a note to employees after the company's second-quarter 2024 earnings were released. Gelsinger said that the company was announcing significant actions to reduce costs. “We plan to deliver $10 billion in cost savings in 2025, and this includes reducing our headcount by roughly 15,000 roles, or 15% of our workforce. The majority of these actions will be completed by the end of this year,” read the note. In his note, the CEO expressed that the news was painful to share and even more difficult to read. He said that it was an “incredibly hard day” for Intel as they were making some of the most consequential decisions in the company’s history. “Our costs are too high, our margins are too low. We need bolder actions to address both – particularly given our financial results and outlook for the second half of 2024, which is tougher than previously expected,” he wrote. Gelsinger also enumerated the key areas of focus to make Intel a “leaner, simpler, and more agile” company. The key priorities in this direction are reducing operational costs, simplifying portfolio, eliminating complexity, reducing capital and other costs, suspending dividend, and maintaining growth investments. Cisco’s second round of layoffs this year On August 14, it was reported that Cisco Systems was planning to lay off about seven per cent of its employees in its second round of layoffs this year. The layoffs come at a time when the company has been shifting its focus to more rapidly growing areas in technology - AI and cybersecurity. While the California-based company did not specify the number of layoffs, as of July 2023, it had 84,900 employees. Based on the percentage announced, this would essentially mean that around 5,900 employees will be affected by the latest round. In February this year the company had slashed as many as 4,000 jobs. Infineon, IBM, and more On August 5, German chipmaker Infineon announced that it would be cutting 1,400 jobs globally and also relocating another 1,400 to nations with lower labour costs. The company said that the fresh job cuts would impact several hundred positions in its plant in Germany. The company reported a revenue of $4 billion in the April-June quarter. The job cuts are a part of the company’s previously announced Step Up cost-saving programme. On the other hand, IBM said that it was closing its China R&D operation, likely affecting over 1,000 jobs. The US-based tech giant has been struggling with declining demand for its hardware and challenges in growth markets in China. However, the company asserted that these changes will not impact its ability to support clients across the Greater China region. Canadian online food delivery service SkipTheDishes and its parent company sacked close to 800 employees. “We are restructuring our business and reducing the size of our workforce. This move affects approximately 100 Canadian market employees, along with 700 operations employees servicing the global Just Eat Takeaway.com organisation based out of Canada,” CEO of SkipTheDishes, Paul Burns in a LinkedIn post. Burns said that the decision was necessary for sustainability. Why are layoffs on the rise? The most significant reason behind these layoffs seems to be the aggressive push among companies to reduce costs to meet the prevailing challenging financial conditions. Intel cutting a massive 15,000 jobs underscores the urgency of cost-saving strategies. This is driven by declining profits and a bleak financial outlook for the second half of 2024. Similarly, Cisco’s major layoff shows how there is a strategic shift happening toward high-growth areas like AI and cybersecurity that calls for a realignment of resources. Another major trend that we have been seeing is the impact of the global economic uncertainty which is affecting both revenue and demand. For example, Infineon’s job cuts and relocations show a broader effort to reduce operational costs in the wake of slowing demand. On the other hand, IBM’s layoffs in China highlight the challenges that these companies are facing in maintaining profitability in growing markets. And, companies like SkipTheDishes are resorting to restructuring to ensure long-term sustainability, even if that means major job losses. In essence, the sharp rise in layoffs reflects a combination of strategic moves, cost saving, and broader economic challenges that the tech industry is currently facing. Many companies seem to be prioritising financial health and future growth areas, even at the expense of their workforce. Although the ongoing wave of layoffs is challenging, it is important to know that the tech industry is constantly evolving. The change will bring new opportunities and as companies are moving towards AI, cybersecurity, etc., there is a growing demand for skilled professionals in these areas. For those affected by the wave, this could well likely be an opportunity to upskill or reskill, essentially aligning oneself with the future needs of the tech industry. We recommend investing in learning new skills, taking advantage of the resources available on the Internet, and deepening one’s expertise in high-demand areas. This way one can make sure that they are moving forward even.
