The New Dot-Com Bubble Burst: Why Technology Layoffs Indicate the Advancement of Innovation

Veteran data scientist Allison Croisant, who has worked in the tech sector for almost ten years, was unceremoniously let go by PayPal earlier this year, adding her name to the growing list of unemployed people in her area. If Croisant had to sum up the job search process in one word, it would be “insane.”

Croisant, who lives in Omaha, Nebraska, and works remotely for PayPal, is representative of a larger trend in the software industry. According to Layoffs.fyi, more than 200 organizations have laid off nearly 50,000 tech professionals since the year’s commencement. This round of layoffs is consistent with the pattern observed in 2023, a year in which about 1,200 organizations laid off over 260,000 IT workers.

Tech behemoths including Amazon, Microsoft, eBay, Unity Software, SAP, and Cisco have all joined in on this trend of downsizing, as have Alphabet, Amazon, Meta, and SAP. The market has responded favorably to these cost-cutting initiatives, with Wall Street expressing hope for higher earnings brought about by better spending control and artificial intelligence’s greater efficiency. This tendency is best shown by PayPal’s announcement in January that it will be laying off 2,500 employees, or 9% of its workforce.

The path ahead appears arduous for people like Croisant negotiating the unpredictable landscape of reemployment. According to outplacement company Challenger, Gray & Christmas, 2023 was the second-largest year of IT job layoffs on record, only surpassed by the dot-com meltdown of 2001. Not in the brief history of the internet have so many tech workers lost their jobs—that is, until the sudden demise of Pets.com, eToys, and Webvan.

The difficulties experienced by tech professionals are further exacerbated by recent statistics showing that February saw the greatest number of job layoffs since 2009, at the height of the financial crisis.

CNBC spoke with a number of people who had been laid off in the IT industry in the previous year, emphasizing how competitive the job market is becoming. Many voiced worries about the demanding work requirements and lower pay than in their prior positions.

This dilemma is especially noticeable for positions like data scientists and software engineers, which were in high demand only a few years ago. Some are now thinking about quitting the field entirely in order to pursue opportunities for steady work.

The author of Layoffs.fyi, Roger Lee, observes that a lot has changed in the market, with many experts looking at non-tech jobs and taking pay, work environment, and stability compromises.

During Croisant’s job search, he applied for a lot of jobs—some of which drew hundreds of applications. The employment market is becoming more complex, she observed, as employers are demanding more advanced degrees and specialized skills in fields like artificial intelligence and machine learning.

Croisant overcame many obstacles to eventually land a lower-level data analyst position with a financial technology company, but at a significantly lesser salary. Looking back on her experience, she acknowledges that she was apprehensive about her job stability but feels lucky in comparison to others who are still having difficulty finding work.

Similar sentiments are expressed by Krysten Powers, who was let go from a travel tech business and describes the current employment market as unrelenting and confidence-eroding. Powers is resilient and determined to push through the difficulties in spite of the failures.

Beyond the experiences of individual workers, entire communities and networks are impacted by tech layoffs. Former Google employee Christopher Fong started Xoogler.co to help people who were let go by the internet giant. Layoffs have affected even well-known corporations like Google, forcing former workers to adjust their job searches to the new landscape.

Google employee Michael Kascsak highlights the importance of having reasonable expectations and being adaptable in the current work climate. As a visa holder, Kascsak has encountered obstacles in his job search, but he is still hopeful about landing a good position.

Within the tech sector, the current job market offers a striking contrast. While layoffs are still occurring in some industries, the need for AI experts is propelling fast hiring and growth, which is creating possibilities and raising salaries.

The difficulties experienced by visa holders in the employment market are reflected in Amit Mittal’s experience. Mittal is adamant about getting a job and making a contribution to the tech sector in spite of obstacles.

Experienced software engineer Bill Vezey, who was let go by eBay, highlights the need of networking and personal branding when navigating the job market. Even with all the uncertainty, Vezey is still positive about his future in technology.

Krysten Powers acknowledges the feeling of impending doom but refuses to give up, echoing the feelings of many job seekers. Powers isn’t letting the obstacles stop her from pursuing her objective of landing a fulfilling job.

Tech workers like Croisant, Powers, and numerous others endure in an environment marked by uncertainty and upheaval because of their endurance and determination. Even though the path ahead might seem difficult, their experiences demonstrate the human spirit’s unwavering perseverance.