The wave of layoffs that saw three giant global tech companies lay off a total of 15,820 staff in less than two weeks has heightened the concerns for Nigerian tech companies.
These concerns are not unfounded, as more tech companies are still continuing to downsize, albeit quietly.
From Stripe to Twitter and then Meta, the tsunamis of layoffs have left many tech workers singing a dirge on various social media platforms for weeks now. And from all indications, those are just the beginning as more tech layoffs are projected to take place between now and Q1 2023.
Already, American retail giant, Amazon, has confirmed that it is also laying off about 10,000 of its staff and reports say the company has commenced the process with a memo to all its workers preparing them for the tsunami.
Worrying numbers: According to the startups’ layoffs tracking website, layoff.fyi, a total of 814 tech companies have laid off 128, 865 employees so far this year. Recall that Stripe, the American fintech giant had early this month announced 1,120 head cuts, representing 14% of its workforce.
Twitter, which was newly acquired by Elon Musk also slashed its employees by almost half as it laid off 3,700. The biggest announcement, though not by percentage of the workforce, came last week from Meta which sacked 11,000, 13% of its workforce.
Aside from those 3, American cloud-based software company, Salesforce, also this week announced it is laying off an undisclosed number of workers, which reports put at hundreds.
With these developments, there is a rising concern not just for tech workers that have been thrown into the labour market, but for Nigerian tech employees.
Constant factor: One thing that has been a constant factor from the 3 major layoffs is that tech companies had over-hired in the last 2 years. And the hiring frenzy of the past was fueled by the COVID-19 pandemic, which created a bubble of revenue for tech companies. The reality now, according to the tech giants, is that the headcount can no longer be sustained and they have to cut spending, by all means, to remain afloat.
Nigerian tech employees worried: For many employees working in the tech space in Nigeria, the issue of layoff is no longer a question of if, but when, and who is going to be affected. An employee of Paystack, a leading fintech in Nigeria, which was last year acquired by Stripe, who would not want to be named for fear of being victimised spoke with Nairametrics about their concerns. He said:
- “Our organisation is not insulated from the global economy and many of us have been worried, even before the news of mass layoffs by the big tech companies start coming out, that layoffs may happen at any time. Recent developments only confirmed our fears and even though there is no communication on that yet from our organisation, some of us are already working on a plan B.”
Another tech worker who simply wanted to be identified as Oluwaseyi said:
- “Tech layoffs are already happening in Nigeria, it is not just as pronounced as that of the global tech companies. Many companies are suffering from the bad economic situation in Nigeria; high inflation, volatile exchange rate, etc. I know it may happen to me or any of my colleagues also because things are not moving the way they should, the company is not making money as they used to and they also need to satisfy their investors.”
No escape: Co-founder of Tech4Dev, a non-profit organisation that is building entrepreneurs through digital skills, Oladiwura Oladepo, said layoffs are already happening in the Nigerian tech space, though not at a magnitude where it could be described as a tsunami. While noting that the same factors affecting the global tech giants are affecting Nigerian tech companies, Oladepo said there is no way the Nigerian companies could escape layoffs.
- “The same global recession is affecting everybody. It is affecting every organisation within the Nigerian space as well. There is no way Nigerian tech companies can escape from this tsunami of layoffs.
- “Think about it, the big global tech guys are the ones that have the muscle to hire a lot of people and if they are laying off at this massive rate, Nigerian companies are not any better. Inflation in Nigeria has increased from 11% to about 21.63% now. So, there is no way that Nigerian tech companies can escape layoffs. I know a couple of organisations in Nigeria that have been laying off silently.
- “But people don’t know because it is not a loud thing and these organisations are not big like Flutterwave. They are laying off and the ones that are not laying off are already implementing a hiring freeze and some are reducing the number of new intakes. But what is happening in Nigeria cannot be described as a tsunami because they are not that massive,” Oladepo said
According to Mr Bello Muritala, Founder SalesUltimo, a chatbot and social media marketing Software as A service, layoffs are bound to happen among tech companies in Nigeria because some of them are overloaded. He said:
- “Many Nigerian startups, once they raised funds from investors, will start to hire beyond what they need. This has made many of them over-bloated with staff. With the current economic realities and funding slowing down, there is no way many of them will not downsize. Some of them are also overvalued and this is the time for them to right size.”
Adjustment time: According to the General Manager, of Microsoft Dynamics 365, Nikesh Parekh, the world is now experiencing a tech recession. Explaining the recent mass layoffs by tech giants, he said:
- “We are feeling the turn on tech investments. In 2020, all of these companies felt the COVID tailwind accelerating digital investments for the stay-at-home economy. That has flipped into an overinvestment in technology from a customer’s perspective and too many tech employees at most of the big tech companies. When building their budgets and forecasts, every tech CEO and CFO drew a straight line at 25-40% revenue growth into the future. Now revenue growth has slowed dramatically or contracted and every tech company needs to adjust to reality.”
Suggesting that there will be more layoffs as other tech companies will want to leverage the current trend to trim down their number Parekh said:
- “I believe tech CEOs are using a time when there are mass layoffs in the market to trim the fat and get rid of low performers. It’s easy for tech CEOs to do a layoff just because everyone else is doing a layoff.”
For Mr Adewale Adoye, an IT expert and Chief Executive Officer of Chronix Technologies, the tech companies are adjusting to the current economic realities and this is because they had overshot their number in the last two years.
- “Technology companies went on a hiring spree during the pandemic to double their headcount. But with the current higher inflation and recession around the corner, they have to adjust themselves. Unfortunately, the layoffs may be far from over. While there may be some level of calm for the remaining days of this year, the tech industry may witness more mass layoffs in Q1 2023 as companies continue to adjust,” he said.
