Nigeria tech brace up for mass layoffs

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.

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 coronavirus 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.