Analyst: Ugly Year for Tech Layoffs, and It’s Going to Get Worse

Laid off workers head out the door, carrying boxes of their posessions, in a year of big tech layoffs
Photo: iStockphoto

Early this year, analyst Trip Chowdhry from Global Equities Research predicted that the tech world was going to see big layoffs in 2016—some 330,000 in all at major tech companies. At the time, these numbers seemed way over the top. Then IBM started slashing jobs in March—and continued to wield the ax over and over as the year progressed. Yahoo began layoffs of some 15 percent of its employees in February. Intel announced in April that it would lay off 12,000 this year.

So, was Chowdhry right? “Yes,” he told me when I asked him this week. “The layoffs I predicted have been occurring.” And worse, he says, these laid-off workers are never again going to find tech jobs: “They will always remain unemployed,” at least in tech, he said. “Their skills will be obsolete.”

Some of these layoffs are due to a sea change in the industry, as it transforms to the world of mobile and cloud. But some are signs of a bubble about to pop.

It’s all going to get worse in 2017, he predicts, because that’s when the tech bubble will burst. Chowdhry, someone who has never been reluctant to go out on a limb, is predicting that’ll happen in March.

Before I turn to Chowdhry’s scenario for future gloom, take a look at the table below. These are his predictions for layoffs this year, based on an upward revision of his original estimate (to 369,000 in total), along with a few big ones that he missed. Not all have been announced to date, but he still stands by his overall numbers, and notes that many companies are trying to hide layoff activity. Microsoft, he pointed out in an October report, is “letting go of 200 to 250 people every week, and none of these are announced.” And IBM has been laying off wave after wave of people this year, according to anecdotal evidence being collected by the group Watching IBM.

That’s what’s going on at the big companies. But the transformation, he says, is just going to get more painful, because the layoff tsunami is about to hit startups.

“When you see the large companies laying off, that is an indication that the customer base is struggling,” he says. “And the startups have the same set of enterprise customers as the bigger companies. The only thing protecting them now is that they have funding that takes them to the end of this year or the middle of next year, but by March or April it’s going to get very bloody.”

They won’t be able to get more funding, he says, “because the startup companies have exhausted the number of fools. They exhausted the fools in Silicon Valley, then they exhausted the fools in New York City, in Europe, and now they’ve exhausted even the Middle East. There are no fools left.”

“The bubble will burst,” he says, “and the impacts on the tech industry will last two years.”

A tech layoff scorecard:

Company Name

Prediction

Announced to date

EMC

28,000 (40 percent)

VMWare

5100 (30 percent)

900 (5 percent)

HP Enterprise

72,000 (30 percent)

HP Inc

14,000 (30 percent)

IBM

150,000 (40 percent)

Cisco

28,000 (40 percent)

5500 (7 percent)

Juniper

3500 (40 percent)

Oracle

33,000 (25 percent)

Microsoft

23,000 (20 percent)

Network Appliance

3200 (25 percent)

1500 (12 percent)

Symantec

4750 (25 percent)

F5 Networks

1125 (25 percent)

Yahoo

6250 (50 percent)

1600 (15 percent)

Yelp

1800 (50 percent)

Intel

Not predicted

12,000 (11 percent)

Cypress

Not predicted

500 (8 percent)

Autodesk

Not predicted

925 (10 percent)

Seagate

Not predicted

1600 (NA)

Zenefits

Not predicted

250 (17 percent)

Source: Trip Chowdhry

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Senior Editor
Tekla Perry
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