Companies are going in for their second round of job cuts.
More people were laid off in the U.S. tech sector in January than any other month last year, according to Crunchbase News data. In January alone, more than 58,000 people were laid off in the U.S. tech industry, beating the record of 44,570 job cuts set in November 2022, when Meta, Stripe and Amazon each announced plans to shed thousands of jobs.
Perhaps more interestingly, the majority of layoffs in January came from companies that had already announced staff cuts once or twice in 2022.
The repeat offenders
We previously touched on “cut once and cut deep,” the generally approved strategy for layoffs. Trimming staff count more than once is usually bad for employee morale and reduces productivity as remaining workers anticipate another round.
“It’s frightening when your coworkers get laid off. There’s more work to do because there’s fewer people there. You question how the company is doing,” said Healy Jones, an executive at the startup consulting firm Kruze Consulting. “That continuously happening is really painful.”
As of the beginning of January, 9% of companies in our layoffs database had conducted two or more layoffs. By the end of the month, that number jumped to 12%.
Overall, repeat offenders were responsible for 50% of laid off tech workers in the U.S. last month. Around a quarter of the companies that announced job cuts in January had previously conducted them last year. Amazon planned to cut 10,000 workers back in November. In January, it announced another 8,000 would leave the company. Salesforce 1, which announced a layoff of 1,090 people in November, cut an additional 8,000 in January. (Side note: That’s why the number of companies in our database hasn’t grown by that much, but the volume of layoffs has.)
While more private companies than public companies announced layoffs in January, public companies were responsible for 91% of those employees who lost jobs 17 of the 23 companies that announced a second cut were public.
Why are public companies doing secondary cuts?
“With big tech, we’re going to see hiring freezes. We’re going to see more layoffs,” said Nolan Church, CEO of consulting firm Continuum. “And I think this middle-management layer is the most at risk.”
Public companies spent 2020 and 2021 stockpiling talent as they aimed to grow amid a tech worker shortage in the U.S. But, according to Church, that led to large tech companies dealing with bloat. As a company’s org chart grows and different teams get bigger, it may start instating managers that can wrangle big teams in smaller groups.
“There’s a lot of duplicative work. There’s a lot of bureaucracy. There’s a lot of inefficiency because there’s just too many people,” Church said.
Companies are also adjusting to the realities of the current economic situation as it unfolds. On average, companies that conducted their second round of layoffs did so around 4.5 months after their first round and, according to Jones, some executives are reluctant to make sweeping cuts that lay off more people than necessary.
“Most recessions last less than 18 months and most last around 10. And this recession is being driven by the Federal Reserve,” Jones said. “So when they decide it’s going to be over, hopefully things pick up again.”
Illustration: Dom Guzman
Stay up to date with recent funding rounds, acquisitions, and more with the