Tech Layoffs in 2024: 4 tips to weather the storm
I was working as a software engineer at Microsoft when they announced their first-ever layoffs in January 2009.
For days after, we still didn't know who was affected for certain. Even the tiniest thing, like my colleague's badge not working on campus, or email taking too long to load, was excruciating. As an early-career employee on an H-1B visa with a new family, the stakes felt even higher.
Uncertainty is never easy. And after seeing tech layoffs in 2023, we have unfortunately already seen another round in the first weeks of 2024. While we hoped most companies were done with layoffs, things don't look so rosy. Plus, with heightened anxiety around AI impacting the tech industry, the future seems muddier than ever.
Today I want to talk about the causes and implications of these layoffs, and what you can do to minimize your chances of being affected — but bounce back quickly if you are.
Are layoffs the “new normal”?
Many of the factors that are contributing to layoffs aren't anything new.
For instance:
Rebalancing post-pandemic hiring: Leveling back out after the pandemic's tech hiring rush.
IRS Section 174: A US tax section concerning research and development (R&D) expenses that's undergone significant changes. Just a few of those changes mean that companies now 1) must claim software development costs as R&D expenses, and 2) can no longer deduct R&D costs as an expense.
Cost vs. Profit Center: A growing prioritization over departments that are profit centers, directly contributing to revenue, rather than operational cost centers.
Renewed interest in creating profitable businesses and products: Companies and investors are prioritizing projects that demonstrate clear profitability and sustainability.
Higher interest rates: This trend is continuing, meaning free money is not readily available to invest in potential ideas that may or may not pan out.
VC slowdown: Venture capital (VC) funding is slowing down, which has a significant impact on tech startups and smaller companies.
All of these factors have posed financial constraints and challenges for small and large companies alike. And just because we turned the page on a new year, it doesn't mean they're really going away.
That said, inflation is not nearly as bad as it was last year either. So it is a bit jarring that in the first four weeks of 2024, top tech companies from Salesforce to Microsoft to Amazon laid off another 25,000 employees.
In a way, it seems that layoffs in tech may even be considered the "new normal" — in no small part because they seem to be rewarding Wall Street, at least in the short term.
In a recent NPR article, Jeff Shulman, professor at University of Washington’s Foster School of Business, noted that "layoffs seem to be helping their stock prices, so these companies see no reason to stop."1
While it's a chilling thought for tech industry workers, it's likely that we will see layoffs occur throughout the year. We can only hope they won't grow to be as severe as last year.
We also have to take notice of the elephant in the room. Every month, Generative AI is improving and becoming more entrenched in the industry. Our existing services are rapidly seeing AI integrations, as companies big and small (including outside the tech industry) are looking to take advantage of GenAI’s power.
With these developments in mind, it's hard not to worry that recent layoffs are fueled at least in part by AI anxiety.
However, while AI is going to play a huge role in what we can expect for the future, it's reasonable to say that AI isn't the main culprit for layoffs this year. That said, AI is poised to be a massive catalyst for transformation — which means that every developer should adopt some basic AI skills to stay ahead of the curve.
So now let’s explore how the coming months and years may look for the tech industry.
What to expect in 2024 and beyond
Reshuffling of engineering resources
Companies are focusing more on AI initiatives and hiring more for AI. Developers with the right skills will join new AI initiatives within their companies, and others will be hired externally to new teams.
This doesn't mean that only developers who are prepared to join AI initiatives will be in demand. Often, companies will still need to fill the roles they've left behind. But they may have fewer open roles for junior developers, for example. This means competition will be higher across the board.
The reason why is linked to the next point.
Increased expectations to leverage AI
AI will disrupt jobs. This is almost a guarantee. However, in my opinion, most of those affected jobs will be outside the software engineering industry.
That said, junior developer roles and semi-technical roles will see a change in their workflows, emphasizing efficiency and reduction of tedium, which may result in increased competition.
Since many technical tasks can be semi-automated, modern workflows will see a combination of AI and humans taking on essential tasks together. A prime example of this would be by using thin wrappers around LLMs like OpenAI. It's not hard to imagine how a junior developer or data analyst can leverage this in their work.
Consider a thin wrapper for financial analysis on top of OpenAI API. A data analyst can use the wrapper to generate a financial report. Leveraging this thin wrapper can mean the difference between a team of 5 data analysts generating a report monthly, and one analyst generating that report in one day.
In this way, leveraging AI will lead to downsizing, but we still need human employees to guide and supervise the AI tools in use. Thin wrappers are not plug-and-play solutions. We still need a human in the driver's seat prompting, guiding, and modifying the LLM's output to their desired result.
This means that the most in-demand candidates will not only have the right expertise for their current role; they will bring the skills and ingenuity required to leverage AI APIs and models to both streamline their workflows and build the next generation of AI-enhanced products and applications.
Some fields and products are falling out of favor
Companies and investors will continue freeing up resources and cutting down in areas that haven't been historically profitable or sustainable.
Meanwhile, certain products and services may see a decline as well.
For instance, Amazon Alexa might see more layoffs. Alexa's AI just isn't that impressive, relative to other publicly available assistants. It has historically struggled with giving intelligent answers. If I have to buy an assistant for accuracy, I would personally prefer a home assistant with Open AI, or Google Home with BARD. Alexa is fine for asking for weather and setting up timers, but there's a reason most people aren't using Alexa to place online orders. Amazon has yet to find a way to generate and grow Alexa. Even after much hype, I don't see Alexa becoming a great B2B business with more integration into hotel rooms, conference rooms, and cars.
Other companies and products may also see pressure to find buyers or do more reconciliation, e.g. as with home fitness startups like Tonal and Peloton, or health kit devices.
If you're in any of these companies and fields (or related ones), I certainly hope that you won't be affected. But personally, I'd rather be more cautiously prepared than complacent.
4 tips for weathering the storm
The reality is that nothing is certain. We have no idea how many more layoffs await us in the coming year, or what new disruptions await — but we can certainly expect more belt-tightening to continue.
Here are four steps you can take to optimally prepare yourself for whatever happens.
Keep a close eye on your desired career path.
Uncertainty aside, you probably have an idea of the next milestones you want to hit. Maybe it's jumping into a new career path or specialization (like game development or freelance web development) — or perhaps it’s moving into a more senior role, or becoming a manager.
Whatever it is, don't lose sight of those goals… but don’t be afraid if the road to get there seems a little hazy.
Your desired career path could see considerable disruption and/or evolution. New AI tools will be coming into use, competition will increase, and more specialized skill sets could grow in demand. Whatever happens, keep a finger on the pulse of developments in your desired field or roles, and be ready to learn new skills so you can stay ahead of the curve.
The goal is to remain more proactive than reactive.
Have a plan.
Dealing with uncertainty can be disorienting. But it’s exactly in times of uncertainty that having a plan (or plans) becomes even more critical.
If you haven't been laid off, but you're anxious about the possibility, it's helpful to mitigate any stress by thinking several steps ahead. For example, hash out the whole scenario of a potential layoff and identify your next steps — whether those steps are financial, logistical, or interpersonal. (Importantly, write the plan down; in the event that you do get laid off, chances are you may feel too scattered to remember them clearly.)
If you've already experienced a layoff, I'm sorry to hear it, and you're in good company. That said, a plan can help you, too. Bouncing back after a layoff isn't so different from a usual job hunt plan, but right now, you should be adding some extra steps. For instance, learning AI skills, learning system design, resuming in-person networking, and starting interview prep would be especially helpful (more on the latter in just a moment).
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Be "almost ready" for interviews.
The best way to reduce interview-related anxiety is to be "almost ready" for interviews at all times. This is especially important if you're in one of those areas that's more likely to be laid off or reshuffled.
Of course, if you are laid off, preparing for interviews becomes your full-time job, so this tip is more so for those who still have their jobs.
You don't have to be fully prepared for interviews, but you should be in a state where you'd be in good shape if you had an interview coming in a couple of weeks. Brush up on coding interview patterns, system design, or other table stakes concepts typically discussed in software engineering interviews. If you find you have some cobwebs to dust off, it's best to take care of those knowledge gaps now rather than later.
Remember: interviewing is a skill that can be practiced just like any other skill. How you prepare for interviews is the one element of the hiring process that you can fully control. Take advantage of the opportunity.
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Start learning AI.
It’s 2024, which means that every tech company is investing heavily in AI initiatives — and looking for the right talent to get them there.
If you intend to remain indispensable with your current skill set, you will have to learn to work with AI.
Every software engineer should get comfortable with AI to some degree. This could mean as much as learning machine learning and data science to work with models directly. It could mean as little as getting your feet wet with OpenAI API integrations. It could also mean learning frameworks like LangChain to develop applications leveraging LLMs.
For everyone else, learning some prompt engineering best practices certainly can’t hurt. There will be heightened urgency for those who want to stay competitive in junior or semi-technical roles to leverage AI tools in order to work more efficiently. There will also be numerous opportunities for data scientists, ML engineers, and AI engineers with the skills and experience to lead the AI paradigm shift.
Knowing AI will only benefit you. In fact, you could argue that it already gives you an unfair advantage in today's market. If you're familiar with AI and get laid off, it’s possible you could still get a new job at the same company (I have heard crazier stories).
Staying one step ahead of the industry
There’s a lot of legitimate anxiety around tech layoffs in 2024. However, it's important to remember that we publicize bad news more than good news. Nobody publishes articles about big tech hiring engineers, but they do publish layoff updates.
Here are three important things to remember:
A lot of people lose their jobs everyday, but more people find jobs everyday
Your skills ARE transferable, even if you lost your last role
Focusing on growing your skill set is never a bad investment at any phase of your career
That said, we will likely hear about more layoffs to come. But we don't have to be cynical about it. I know it's easier said than done — but if anything, try to let the news add a level of urgency to your ambitions.
In times of uncertainty, it is important to control the things we can control. In this case, that means taking action to future-proof our skillset.
I hope the tips I shared today were helpful. But I especially hope you don't delay learning AI skills. AI is not going away anytime soon, so we have to embrace it.
In an upcoming newsletter, I'll share the top AI skills you should learn (and in what order) to be job-ready in today's tech climate.
In the meantime, here are some courses I recommend for the skills we discussed today:
Above all, keep doing excellent work, keep upskilling, and keep an eye on what's happening in the industry.
Happy learning!
