The wave of layoffs that resulted in 15,820 employees from three big international software companies being let go in less than two weeks has raised fears for Nigerian tech enterprises.
Given that many tech companies are still secretly cutting staff, these worries are not unwarranted.
Since the wave of layoffs began, many tech professionals have been singing a dirge on social media sites like Twitter, Stripe, and Meta. More IT layoffs are anticipated between now and Q1 2023, so it seems like those are only the beginning.
The American retail juggernaut Amazon has already announced that it will let go of approximately 10,000 employees. According to sources, the corporation started the process by sending a note to all of its employees prepping them for the disaster that is about to befall some of them.
Layoff.fyi, a startup that tracks layoffs, reports that a total of 814 IT companies have fired 128.865 workers so far this year. Recall that American fintech giant Stripe eliminated 1,120 jobs earlier this month or 14% of its staff.
Twitter, which Elon Musk recently acquired, reduced its workforce by roughly half, firing 3,700 people in total. The largest announcement, while not in terms of the employment proportion, came from Meta last week, which laid off 11,000 people, or 13% of its workforce.
Along with those 3, Salesforce, an American provider of cloud-based software, also stated this week that it was firing an unspecified number of staff members, which estimates put at hundreds.
With these changes, there is growing anxiety for Nigerian tech employees as well as for tech workers who have been forced into the job market.
The three largest layoffs have all had one thing in common: tech businesses over-hired during the previous two years with the expectation that the revenue boost caused by COVID-19 epidemic, will continue as people find it as a habit to work remotely. They claim that the headcount can no longer be maintained and that they must reduce spending by whatever means in order to stay afloat.
Nigerian tech workers show great concern over what is happening in the tech industry, the question of layoffs is now one of when they will occur and who would be impacted rather than if. An employee of Paystack, a major fintech in Nigeria that Stripe purchased last year, who asked to remain anonymous out of fear of retaliation, spoke with USAfrica about their worries. He stated:
“Our organization is not immune to the effects of the global economy, and many of us are concerned that layoffs might occur at any time before the news of mass layoffs by the major tech companies started to surface. Recent events have only reaffirmed our anxieties, and even though our organization has not yet communicated on the subject, some of us are already putting together an alternative cause of action.
Going further to seek the opinions of tech workers, another tech worker stated:
“Although they are not as severe as those at international big businesses, tech layoffs are already occurring in Nigeria. Due to rising inflation, a volatile exchange rate, and other economic problems, many businesses are struggling in Nigeria. I am aware that it may happen to me or any of my coworkers because things are not going as planned, the business is not producing as much money as it once did, and it also needs to appease its investors.”
No way out: Oladiwura Oladepo, co-founder of Tech4Dev, a non-profit organization that develops entrepreneurs through digital skills, claimed that layoffs are already occurring in the Nigerian IT sector, though not at a rate that could be compared to a tsunami. Oladepo said there is no way the Nigerian companies could avoid layoffs, despite the fact that the same causes impacting the international tech giants are also affecting Nigerian tech companies.
Layoffs are inevitable among digital companies in Nigeria, according to Mr. Bello Muritala, founder of SalesUltimo, a chatbot and social media marketing software as a service. He stated:
“Once they secured funding from investors, many Nigerian firms began hiring more people than they actually needed. As a result, many of them are now overstaffed. There is no way many of them will not downsize given the current economic circumstances and the stalling of funding. Additionally, some of them are overpriced, so now is the moment for them to get the correct size.”
The globe is currently going through a tech recession, according to Nikesh Parekh, general manager of Microsoft Dynamics 365. He explained the latest wave of massive layoffs at tech giants by saying:
- “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.”
Parekh predicted that there will be additional layoffs because other tech companies would want to take advantage of the present trend to reduce their workforce.
- “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.”
The tech businesses are adjusting to the current economic realities, according to Mr. Adewale Adoye, an IT expert and CEO of Chronix Technologies, and this is because they exceeded their number in the previous 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.
