Why Are Tech Companies Still Laying Off Workers?

The tech industry has always moved in cycles, but the last few years have been especially turbulent. Even with rising stock prices, better earnings, and renewed investor confidence, large firms are still cutting staff. The disconnect is confusing for many workers: if the companies are doing well, why do the layoffs keep coming?

It turns out the answer isn’t as straightforward as “business is down.” Several deeper shifts in strategy, technology, and market expectations are at play. For more labour rights insights and workplace updates, visit our Labour Rights page.

The Pandemic Hiring Spree Is Still Unwinding

During the pandemic, tech companies expanded aggressively. Everyone, from e-commerce firms to cloud giants, hired thousands of workers anticipating a permanent digital surge. But once life returned to normal, demand stabilized, and many teams suddenly looked too big for the revenue they generated.

Companies are still correcting those “over-hires,” and for some, the adjustment is taking years rather than months.

AI Is Reshaping Job Requirements Faster Than Expected

The rise of generative AI has changed internal staffing needs. Roles in operations, content moderation, customer support, testing, and even basic engineering are being restructured or automated.

For some companies, the thinking is simple:
“ If AI can reduce the workload of 10 people to 3, leadership optimises accordingly.”

This doesn’t always mean whole departments disappear, but functions get redesigned, and workers with older skill sets get phased out.

Shareholder Pressure Is Relentless

Publicly traded tech companies now face constant demands to stay “lean,” especially from large institutional investors. After years of criticism for bloated budgets, many CEOs have decided that keeping headcount tight is the new normal.

Wall Street rewards cost-cutting. Every time a company’s “efficiency plan” hits the news, the stock price often jumps.

Rising Operational Costs Are Forcing Tough Choices

Inflation, higher borrowing costs, data-centre expenses, and a strong US dollar have all increased operating costs across the board. Even profitable tech companies are trimming teams to protect margins.

Some firms are also shifting work to cheaper markets,not necessarily as layoffs, but as “role relocations,” which unfortunately still affect existing employees.

Companies Are Preparing for a Slower Global Economy

Despite strong tech earnings, many global indicators,interest rates, consumer spending, geopolitical tensions,suggest a slower economy ahead. Tech companies don’t want to be caught overspending when growth cools.

Layoffs become a pre-emptive move, not a reactive one.

The Industry Has Shifted From “Hypergrowth” to “Sustainable Growth”

For more than a decade, the tech sector chased growth at all costs. Today, the mindset has flipped. Leadership teams now prioritize profitability, predictable revenue, and efficient teams over massive headcount.