In August of last year, the Australian Government and the Tech Council of Australia made headlines with their announcement that by 2030, Australia would create 1.2 million tech jobs. At the time, tech was considered to be Australia’s seventh largest employer and it was projected that the extra workforce would be needed to meet the expected growth. The Minister for Industry and Science, Ed Husic, stated, “Australia will need an additional 650,000 tech workers by 2030 to meet the 2030 target.”
However, fast-forward to 2023 and the picture looks vastly different. According to the headcount live tracker at Layoffs.fyi, around 85,000 tech workers have been made redundant this year. And the numbers are even higher on tracker website trueup.io, with over 100,000 workers reported to have lost their jobs. The majority of these layoffs seem to be attributed to tech giants such as Microsoft, Alphabet (Google’s parent company), Meta (owned by Mark Zuckerberg), IBM, Salesforce, and Amazon.
Even subscription companies, which saw massive success during COVID-induced lockdowns, have not been exempt from layoffs. For example, Spotify recently laid off around 600 employees, and Netflix has laid off smaller numbers of employees. E-commerce company PayPal also laid off 7% of its workforce just a few days ago.
The affected workers have taken to online platforms like TikTok, Reddit, and LinkedIn to express their frustration and discuss possible solutions to the situation. Some companies, like Apple, have so far been able to avoid layoffs, but the tech industry and its workers have undoubtedly been shaken.
Is this the end of the predicted growth in tech jobs? Not according to Professor Barney Tan, Head of the School of Information Systems and Technology Management at UNSW Business School. Professor Tan explains that this is not necessarily a downturn in demand for tech workers, but rather a realignment in where those workers will go. From a long-term perspective, the tech sector still needs more workers and the demand remains sound.
So, why are the big tech companies laying off workers? Professor Tan believes that the current job cuts are a knee-jerk reaction to a confluence of factors. These include over-hiring during the pandemic, a slowdown in demand for services post-COVID, rising inflation and interest rates, and an uncertain economic landscape where downturns are becoming more possible.
Could the predicted increase in AI usage, such as through ChatGPT, have anything to do with the layoffs? According to Professor Tan, to some extent, yes. Although generative AI tools are not yet sophisticated enough to be used unsupervised, many of the workers who are being laid off are HR personnel, whose tasks are becoming increasingly automated through AI.
So, what types of employees are being laid off? Surprisingly, it is not necessarily the technical staff. A report by 365 Data Science found that many of the affected workers are actually HR personnel, accounting for 28% of total layoffs. This suggests that many platforms can now automate routine HR procedures and that the big companies may be looking to reduce recruitment.
Given that for years we have been hearing about the need for workers to fill tech jobs, how does this make sense with the recent layoffs? Professor Tan explains that the principle still makes sense. Younger people may have been attracted to the larger tech firms in the past because of the cutting-edge innovations. But many innovations are driven by smaller tech startups, which have traditionally struggled to compete for talent due to constraints on their material and pay incentives. At the same time, these startups are now able to attract talented workers with their creative ideas, flexible working hours, and the potential for a greater impact on the industry. In this context, the layoffs at the big tech companies could be seen as an opportunity for these smaller startups to grow and provide new jobs.
In conclusion, the future of tech jobs in Australia is a shaken but sound landscape. The tech sector still needs more workers and the demand remains, however, the realignment of where these workers will go has caused some layoffs in the short-term. But as AI continues to develop and automate some tasks, it is important for workers to adapt and reskill themselves to stay competitive in the job market. With a focus on continuous learning and embracing new technologies, the future of tech jobs in Australia remains bright, with new opportunities emerging all the time.