The pandemic has accelerated the use of technology and the spread of new technologies. Technology companies also experienced a rapid growth in this period, causing comments that “there was a hiring frenzy during the pandemic period”. But the growth did not last long, and large-scale layoffs have been made for a while due to people’s return to their pre-pandemic habits and high inflation.
According to layoffs.fyi data, which tracks layoffs in the tech industry, more than a thousand tech companies laid off more than 150,000 employees in 2022. The number of those who were laid off in 2023 has exceeded 50 thousand.
Experts point out that the technology sector has emerged from a growth period. Industry watchdog Scott Kesler tells the BBC in an interview with the BBC that there is less tolerance for large spending on technologies that may not respond in the short term, such as virtual reality and self-driving cars.
It is unknown how long the reductions will last.
Downsizing in the technology sector brought to mind the “dot-com bubble” in the USA in the 2000s. In this period, investments made in newly developing computer and internet technologies could not be returned, and technology companies lost great value in the stock market with the withdrawal of investors. After this period, many companies could not survive.
So, what are the consequences of today’s shrinking wave and is it expected to last long?
Geometri Melek Venture Capital Investment Fund Founder Melih Efeoğlu said, “Everybody is looking for the answer to this question, and nobody knows. There are only predictions.” says.
Although the technology sector is shrinking, the effect of the sector continues. Companies are developing new technologies and they are still vital to the economy.
(1).jpg)
Why are tech companies downsizing?
There are many issues that are among the reasons for the shrinkage of technology giants today. FED’s hard interest rate hikes, global inflation, energy crisis, decrease in online advertising revenues, the changing social and economic environment after the pandemic…
Efeoğlu draws attention to the capital increase during the pandemic period. Saying that many countries provide high amounts of capital to citizens during the pandemic period, Efeoğlu states that citizens also evaluate some of this capital in the stock market or cryptocurrencies.
“This capital has led to a very serious increase in the company values of all companies, especially in America, regardless of technology, tourism or industry.”
We are talking about companies with increased value taking more daring steps in matters such as employment and advertising, but the balance is broken due to the lack of capital.
Other companies face more specific problems.
“Some technology companies have had very serious management and sales difficulties, and such companies have lost value at high levels,” Efeoğlu says. Like the podcast industry… In a report in Bloomberg, it is said that the boom in the podcast industry has come to an end, and that some of the big spenders in the industry have withdrawn due to growing concerns about the economy.
How have small tech startups been affected?
Efeoğlu says that 1-1,5 years ago, startups looking for large capital were thinking “from which investor should I choose”, but now access to these capitals is much more limited.
So what about tech startups looking for smaller capital? Efeoglu replies:
“There does not seem to be a radical change in access to capital, where companies seeking double-digit million-dollar capital will have much more difficulty, but which we can describe as more modest – between 100 thousand dollars and 1 million dollars for our country, and up to 5 million dollars for abroad on average.”
Graphic: Hafiz Dormitory
