Tech Company Layoffs: The COVID Tech Bubble Bursts

[Updated Aug. 17, 2024, with layoff announcements from Cisco, Formlabs, Sonos, and Tally.]

When much of human activity moved online during the height of the pandemic, tech companies were thriving. Call it the COVID tech bubble. Now we've hit the COVID tech bust.

By the second half of 2022, tech companies had initiated significant layoffs — something that had followed an extended period of frenzied tech hiring and attention to employee experience. Standard explanations for the cuts were that companies hired too many during the pandemic and they were looking at the specter of a recession in the months ahead. It sounds a lot like the dot-com boom and bust of yore. Not all companies are impacted equally. It's the ones that hired at an accelerated rate during the boom that seem to be hitting the brakes right now.

At the same time, IT pros with cybersecurity, cloud, and data analytics/machine learning skills have remained in high demand so far.

In this space, InformationWeek will document some of the more significant layoffs, updated regularly. Be sure to check back.

Here's a look at the biggest tech layoffs so far:

PacketFabric, August 15, 2024, announcement. Layoff total unconfirmed.

In an effort to optimize business operations, the Los Angeles-based infrastructure company laid off an undisclosed number of employees amid plans to continue to deliver great value to its customers and their businesses in the future, according to a company blog post. “We continue to innovate Network as a Service with leading-edge solutions and robust network infrastructure, providing unparalleled network connectivity to empower users and businesses worldwide. Our focus as a company is unchanged: to support our customers with the highest standards of service.”

Related:Demand for Software Developers Still High Despite Cloudy Economic Outlook

Sonos, August 12, 2024, announcement. Layoff of 100 people, 6% of workforce.

Sonos laid off 100 employees on Wednesday morning in an effort to wind down some of its customer support offices, including one in Amsterdam that will close later this year, according to The Verge. The companywide layoffs will reportedly affect several units including marketing, product and engineering, platform and infrastructure, and software quality. “This action was a difficult, but necessary, measure to ensure continued, meaningful investment in Sonos’ product roadmap while setting Sonos up for long term success,” CEO Patrick Spence said in a statement obtained by The Verge. According to the report, the layoffs arrive as a result of the fallout from its disastrous mobile app redesign.

Tally, August 12, 2024, announcement. Layoff of entire workforce.

In a LinkedIn post on Monday, CEO Jason Brown announced that the fintech company would be shutting down business operations as a result of a lack of funding. “After nearly nine years of helping people manage and pay off their credit card debt, we have made the difficult and sad decision to shut down Tally. This was not the outcome we had hoped for, but after exploring all options, we were unable to secure the necessary funding to continue our operations,” Brown said in the post.

Cisco, August 9, 2024, announcement. Layoff of 5,900 people, 7% of workforce.

In its second round of cuts this year, Cisco is laying off 4,000 employees as it shifts its focus to higher-growth areas, including cybersecurity and AI, according to Reuters. The latest round of layoffs will reportedly impact 5% of its workforce. The company parted with 4,000 employees in February, and could see a similar or slightly higher number of affected employees as a result of its latest move. According to the report, an official announcement will likely be announced as early as Wednesday with the company's fourth-quarter results, said the sources, who were not authorized to speak publicly.

According to a report from ABC News on Aug. 14, Cisco is actually planning to lay off 7% of its workforce, though previous reports earmarked the total at 5%. While the company has yet to confirm the total number of impacted workers, it reportedly employed 84,900 people as of July 2023. Based on that figure, the number of jobs cut would be about 5,900. “The restructuring will help offset the earnings impact from interest expenses associated with financing the Splunk acquisition and will rationalize combined workforces,” said Edward Jones analyst David Heger in a statement obtained by ABC News.

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