We are in March 2023, and we have already seen 123,000 layoffs this year. This compares to 161,000 layoffs across all of 2022. Today we are going to discuss how you can prepare for a layoff.
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We have seen a majority of layoffs specifically within the tech sector, but obviously, that has repercussions across other industries, especially within financial services. So if you think about why the layoffs are happening, let me give you a bit of the back story.
As all of us know, in 2020, we were suddenly hit by a pandemic called Covid 19, and in 2020, tech companies basically had to scale up their operations as they would probably have done in the next five years in a matter of weeks because everyone was online, everyone was on YouTube, everyone was on Facebook, Instagram, Google, you name it. Each and every tech company had to scale up its operations because the eyeballs were online.
Now, what that means is, As we approached the end of 2022 when the effects of the pandemic had significantly become lower, people started going back to their normal lives, even though it was not at the pre-pandemic levels. Even though we have more eyeballs online than we had in 2019, we still as a society, spend less time online than we were doing in 2020.
So, what that means is that businesses therefore are spending less money on ads. And what that means is that Google or Facebook is making much less ad revenue and a majority of their revenue is through advertising and when their revenue gets hit, their profits get hit.
But, as a shareholder company that's publicly listed and known as a safe investment for their shareholders, what they want to show to their shareholders is that they are generating consistently high profits. Now, you do the math. If your revenues are going down and you have increased headcount, which is equating to a higher cost, you suddenly have a reduction in profit, which is not a great thing to say to the market.
Therefore, the way to keep profits at the same level is to reduce the costs. Where do you reduce the costs? You basically, look at the headcount that you had grown in the last couple of years, and then you try and bring the costs down by actually laying people off. It's really unfortunate.
Does Sundar Pichai or Satya Nadella want to do this?
I don't think so, but as responsible CEOs, you have to sometimes do these unpleasant things.
Now, obviously the tech industry has its repercussions on the financial services market, which automatically brings the domino effect.
Now, does that mean that the tech industry is doomed and that we shouldn't find jobs in the tech industry anymore?
Absolutely not.
In order to understand that I have to tell you a bit more about economic cycles. Economic cycles are typically about seven to eight years long whereby the economy is growing and then it reaches a boom, and then it's receding and then it reaches a depression and then it goes back up again. So, that is the cyclical nature of an economy.
With tech, this is what I 100% expect to happen as well. In fact, we are already seeing the technologies that will move tech into its next stage of recovery. If you haven't watched my last couple of videos on ChatGPT, that is basically I imagine one of the ways that the tech industry will grow in the next few years.
Now, that said, there's actually another interesting economic trend that's been affecting all of this. Microsoft and Google and Facebook operate in very different markets. So, if you look at Google or Facebook or Instagram or any of the consumer apps that you and I use, we are a very different market to what Microsoft operates in, which is the enterprise in the business market.
Google has been, in the last few years trying to get market share from Microsoft using something called the Google Cloud platform. Microsoft has grown in that sector so much that now it's trying to eat into Google's retail consumer revenue using ChatGPT, so that they have placed an enormous bet on OpenAI's ChatGPT. They've integrated it into Microsoft Bing. So you now have Bing Chat. You have a wait list for the Bing Chat, so you heard it here first. Go and put yourself on the wait list.
So these tech companies have to diversify their markets, and I believe, that this is what is going to make the next few years extremely interesting and extremely competitive for tech.
And I think there's a third factor that's also playing into an increased number of layoffs, especially in 2023, which is that some companies actually run their accounting books from April to March, which means that they are actually offsetting some of that loss by getting the headcount lowered this year so they can go out and make that shareholder declaration in a stronger footing.
I understand that, it's really difficult to make sense of all of this when you are going through a layoff. But please know that this is not about you. This is about the bigger macroeconomic trends that are occurring. But what you do have control over is actually how you respond to the situation and how you prepare for the situation.
Now, of course, there are a lot of other factors at play here, including inflation, including interest rates, and not to put aside the fact that about 30% of the money supply in the US was printed during the pandemic, which means that you have to produce value against the money that's already circulating in the economy.
I don't want to go there because that's a whole different topic, but if you want me to do a video on money supply, what is money and how it impacts your day-to-day decision-making, drop a comment and I will make a video and write a blog on that one.
But the real question is how do you even go about preparing for a layoff.
The first thing build up your resilience.
This is not about you. This is about the macro trends that are happening in the market. You don't have anything to do with that, but if the situation happens that you are laid off, you want to be as best prepared as you can be, and that is all that matters.
If you were laid off because of the massive number of cuts that the tech industry is seeing right now, that has nothing to do with my perspective of how good a performer you are as a hiring manager. So, build up your resilience. Stay confident. That would be my first tip.
The second one is if you don't have it already, create an emergency fund.
What is an emergency fund? It is three to six months of living expenses that you put aside in a liquid easy access fund. Now should something untoward happen, like you lose your job, this is the first place that you will go to. So your living expenses is different to your salary. This does not include your investments, your savings, your luxurious lifestyle, if that's what you have. This is simply how much money you need to sustain yourself for three to six months. If you haven't started building that already, please start that immediately.
The next thing is acquiring new skills.
Obviously, all of us who have jobs in the market have a certain skillset set that we are paid for. What you can do is get some complementary skill sets, which would make you more attractive in an increasingly competitive market.
So for example, if you are a copywriter, I would encourage you to learn how to use a bit of ChatGPT maybe, or pick up graphic design, pick up editing skills and put that together, and suddenly you are a more attractive candidate in the market.
The next one is applying your skillset to a different industry.
I have always been a propend of being in a particular industry and getting the domain knowledge for that specific industry. But in a situation like we are in today where one specific industry is being hit more than the others, and that industry is tech, I would encourage you to look outside your own industry.
What makes it even more lucrative to look outside tech is that if you are a technical person, the demand for your skillset in other industries is going to be quite a lot more because tech has seen an enormous amount of growth in the last few years, but that's not necessarily been replicated across other industries like say for example, media or financial services, and all of those industries are ripe to actually get some transformation going.
Transformation means that it will likely include technology, and if you are technical, that is an excellent place to get your career to.
The next one keep your eyes and ears open.
Keep an ear on the ground. Keep your hand on the pulse of the market. Speak to your network. Look at what's happening within the industry.
What's coming up in the news. Bring all of that together, synthesize and have your own opinion of where the industry is going. And that actually makes you quite an attractive candidate to talk to even during the interviews.
And then the final one I have is diversify your income streams.
Now everyone talks about diversifying your investments. That is something that you want to do. But rarely people talk about diversifying your income streams.
An average millionaire has about seven income streams. This means that if you are running about two income streams, which is your salary and your investments, that means that you can find another couple of income streams and put it into your income bucket. This could be anything from starting a business online or starting a blog or picking up some freelance work on Upwork or Fiverr.
So that's all I had for today, if that was interesting, please leave a like or comment. It really helps the algorithm. If you enjoyed reading this, you might enjoy our Money Quiz.
