With an alarming number of 55,000 layoffs so far this year and more expected to come, one might think the tech industry may never recover. While there are many reasons behind the layoffs, the most evident one is overhiring. Due to the tech industry thriving in the past three years, many companies hired people with less intention. This caused people to have jobs where they weren’t actually generating revenue for the company. Hiring someone is a huge long term expense to the business, and many companies overlook this. As economic conditions tighten, there is no room for hiring people that aren’t benefiting the company. When a business doesn’t perform as well as predicted, the first thing they will do is dramatically reduce marketing budgets; if that isn’t enough, layoffs are the next step. Fortunately, severance plans in tech companies are usually generous, so after someone is laid off, they are able to support themselves until they find a new job. This doesn’t change the fact that layoffs are very stressful, especially when tech companies everywhere are having them, making new job positions more competitive. 

The gaming industry specifically has been affected greatly by the layoffs. The Head of Engineering at a Microsoft game studio says, “In the gaming industry, there isn’t always a focus on the health of the business. It’s a creative endeavor and there is a lot of focus on creating a great experience and making sure it’s fun, but that doesn’t always translate into something that actually makes money.” He brings up an excellent point: there is no point in making a super creative gaming masterpiece if nobody gets to see it because it doesn’t sell well. The gaming industry could definitely benefit from having a sound business plan. However, this poses the question: will the gaming industry take less creative risks now that profits are more of a priority? The Head of Engineering says this could be an outcome, but there is no way of knowing how it will pan out, and the gaming industry needs a better balance of creativity and profitability. 

Many people correlate getting laid off with getting fired although these are two very different things. An engineering manager at Microsoft says, “The most common misconception is that people that get laid off are the lowest performers of the company. That is not true. Sometimes, performance is a part of the calculation, but not always.” Most people that get laid off are just in the wrong place at the wrong time. Often, an area of a business is entirely cut because it isn’t essential to the company. The Microsoft employee explained, “In these situations it can be members of the company that have been there for many years—10-20 years in some cases. They could have extremely high performance and be loved by their peers. They just happen to be working in an area that the business has decided is no longer strategic.” This is unfortunate and may be demotivating for many individuals. However, it should encourage leaders in tech to be more conservative with job positions and company money. Everybody should have an understanding of how what they are doing contributes to the business, and if they don’t, they aren’t in the right place. These recent layoffs could be the wake-up call the tech industry needed.