Private equity data provider Pitchbook often does interesting data pieces on the tech industry. Their most recent piece on the tech industry’s layoffs trend is no different. Here’s a review.
Despite recent high-profile layoffs at companies like Miro, Consensys, and Dropbox, the tech sector’s layoff picture is much better than it used to be. Looking at daily information from Layoffs.fyi, tech industry job losses dropped a lot, reaching a two-year low in October 2024.
Although Miro recently let go of 275 employees, representing 15% of its workforce, while Consensys and Dropbox each reduced their headcounts by 20%, these cases have so far been outliers in a broader industry trend where layoffs have become increasingly rare.
The Data
Data from Layoffs.fyi reveals that the number of tech employees laid off in October 2024, around 3,000 from 33 companies, was less than half compared to October 2023. This decrease in layoffs follows a peak in job cuts in early 2023, which has since seen a 45% drop in companies announcing workforce reductions by the third quarter of 2024.
The Backdrop
This shift can be traced back to mid-2022 when the venture funding market weakened, prompting tech companies to focus on profitability and operational efficiency over rapid growth. Many startups, especially those in Software-as-a-Service (SaaS) and fintech, were forced to scale back after raising funds at high valuations during the market’s peak. Miro, which has not raised venture capital since a 2021 funding round valuing it at $17.1 billion, cited structural inefficiencies and a push for a leaner organization as reasons for the recent cuts.
Some Areas are Gaining Steam
Meanwhile, as the tech industry stabilizes, other areas are gaining momentum, particularly those aligned with AI advancements. The tech-heavy Nasdaq index has risen 23% since the start of 2024, and venture capital interest is growing in AI-focused startups. Major venture funds like Andreessen Horowitz and Thrive Capital have accumulated significant resources to support the next wave of innovation in this area. Investors and venture capitalists are now advising startups with solid financial footing to adopt a more aggressive growth strategy, positioning them to capitalize on emerging opportunities.
The Current Landscape Overall
Overall, the current landscape suggests that, while layoffs persist in certain segments, the tech industry’s overall health suggests that tech life is still good. With that said, companies are increasingly focused on sustainable growth, and sectors related to AI are showing renewed investment interest, suggesting a more balanced and optimistic outlook for the future of tech.
