MENALO PARK, CA – OCTOBER 28: Visitors pose for photos in front of a sign with the new logo and the new name “Meta” in front of Facebook headquarters at 1 Hacker Way in Menlo Park on Thursday, October 28, 2024. (Anda Chu/Bay Area News Group)
The Gulf region’s tech sector is shedding jobs in a big way after a long period of pandemic-era employment boom, an inauspicious turnaround for a sector that spent decades as a primary driver of the region’s economy.
Throughout its history, the tech industry has been known for its cycles of disastrous downturns in hiring that were followed by equally dramatic upswings. But the job losses in the early months of 2023 unleashed warning signs, and even some soul-searching, in a sector that once again appears to be overstaffed by circumstances.
“The best way to understand this is to understand that technology has a ‘moment,’” said Russell Hancock, president of Joint Venture Silicon Valley, a San Jose-based think tank. “If you’ve been around long enough, you know Silicon Valley is going through a downturn like These, usually every eight to ten years.”
Longtime Valley observer Tim Bajarin agreed. “Hiring and laying off is not an exact science,” said Bajarin, principal analyst at Campbell-based Creative Strategies, which tracks technology trends. “What’s happening now is a correction from the over-hiring that occurred during the pandemic, when people were working from home.”
The rollercoaster ride began with the advent of the coronavirus in early 2020, which briefly shocked the tech sector by unleashing mass layoffs after government-mandated business shutdowns to combat the spread of the deadly virus. Shortly after the shutdowns began, tech companies cut 58,400 jobs in the Bay Area, a decline in employment that lasted from February 2020 through June 2020, according to figures compiled by Beacon Economics.
But the lockdowns have changed expectations. They ushered in new ways for people to work, collaborate, and learn. Video teleconferencing has become so pervasive that it has become a familiar thread of the economic and social fabric around the world.
“You had more customer support, more software and hardware for people to work from home,” Bajarin said. “People needed new computers, new printers, new software services, new videoconferencing platforms, back-end services, and more software.”
Unprecedented demand for remote connections has tech companies frantically rushing to add workers throughout their organizations as the evolving sector scrambles to keep up with what appears to be an insatiable appetite for these new tools for jobs, education and gatherings that can be conducted at a distance. At least he looked insatiable.
Within a year, the Bay Area tech industry had nearly weathered its losses from the coronavirus, adding 58,300 jobs from July 2020 through July 2024, according to a Beacon analysis, drawn from official monthly reports compiled by the state Employment Development Administration.
And it went on. For 30 months, the tech industry in the Bay Area hired and hired, and then hired more.
All told, the industry added 130,000 jobs in the Bay Area, eventually reaching an all-time high of 951,300 jobs in December 2024. Technology companies produced net increases in jobs even during the last several months of 2024, which is the period when the sector began In revealing an alarming number of layoff announcements.
But now, or at least during the very early stages of 2023, there are signs that the recent depression of the tech sector has arrived. Much of the slowdown in hiring is related to the decline in remote work and distance learning as well as lower demand for personal computers.
Bajarin said International Data Corp., which tracks PC markets around the world, expects PC sales to drop 20% this year.
In January and February of this year, technology companies cut 13,500 jobs in the Gulf region, according to this news organization’s analysis of information produced by Beacon Economics. Tech companies cut 5,000 jobs in the San Francisco-San Mateo area, 4,500 in the East Bay and 3,900 in Santa Clara County.
“The recent tech job losses are real and will likely continue for a while,” said Steve Levy, director of the Palo Alto Center for Continuing Study of the California Economy. “The South Bay and the region have rebounded from much worse job losses after 2000, and I expect that we will be resilient again after this year.”
Levy also noted that the Bay Area is still adding jobs overall when each industry is counted, which means that the region has — so far — weathered the recent wave of technical staff cuts.
But Jeff Bellisario, executive director of the Bay Area Council Economic Institute, noted that even after the recent job cuts, the technology sector remains well above the levels the industry endured during the 2020 period.
“The tech economy has seen a very strong streak of employment growth for most of the past three years and is now responding to broad economic uncertainty by backtracking on workforce needs,” Bellisario said.
The current cuts include widespread layoffs in the Gulf region by high-profile companies such as Facebook app owner Meta Platforms, Google, Salesforce, Twitter, Cisco, Amazon, Intel, Lam Research, Doordash and Tesla.
“What we see is a correction,” Bajarin said. “But if you have skills in engineering, IT services, network security and software, there will be a boom again.”
The current bad times can easily piss some tech workers off. But Hancock offered some perspective.
“We have a group of people out there, mostly millennials, who only knew Silicon Valley as a boom economy,” Hancock said. “The correction we are in right now may cause some to panic, but the seniors know to stay level.”