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2016 Has Been an Ugly Year For Tech Layoffs, and It's Going To Get Worse, Says Analyst (ieee.org)

Posted by msmash on from the fighting-layoffs dept.

IEEE Spectrum writer Tekla Perry writes: Early this year, analyst Trip Chowdhry from Global Equities Research predicted that the tech world was going to see big layoffs in 2016 -- some 330,000 in all at major tech companies. At the time, these numbers seemed way over the top. Then IBM started slashing jobs in March -- and continued to wield the ax over and over as the year progressed. Yahoo began layoffs of some 15 percent of its employees in February. Intel announced in April that it would lay off 12,000 this year. So, was Chowdhry right? "Yes," he told me when I asked him this week. "The layoffs I predicted have been occurring." And worse, he says, these laid-off workers are never again going to find tech jobs: "They will always remain unemployed," at least in tech, he said. "Their skills will be obsolete." Some of these layoffs are due to a sea change in the industry, as it transforms to the world of mobile and cloud. But some are signs of a bubble about to pop. It's all going to get worse in 2017, he predicts, because that's when the tech bubble will burst. Chowdhry, someone who has never been reluctant to go out on a limb, is predicting that'll happen in March.

21 of 272 comments (clear)

  1. "IT" is on its way out by lgw · · Score: 5, Interesting

    Traditional IT roles are getting automated out of existence - it's all devops and cloud these days. Great time to be working for a cloud provider, though. AWS and Azure are rocking, Oracle is trying desperately (and I hear they have to pay well to get anyone to come), Apple seems to be working on their own thing, rather than using Azure. Google is trying to make that business work for them.

    Heck, lots of normal online businesses are hiring devs to make their stuff work in the cloud, so that's another path.

    --
    Socialism: a lie told by totalitarians and believed by fools.
    1. Re:"IT" is on its way out by MightyMartian · · Score: 4, Interesting

      It's a strange claim, because up here in British Columbia, particularly in Vancouver and Victoria, there's a huge demand for IT workers, to the point where the industry in BC is starting to get very worried that the lack of tech workers could cause serious problems.

      --
      The world's burning. Moped Jesus spotted on I50. Details at 11.
    2. Re:"IT" is on its way out by mu51c10rd · · Score: 5, Insightful

      Traditional IT roles are not being automated out of existence. For one, any company providing a "cloud" need server guys, network guys, hardware techs, and so on. Two, many small/midsize businesses don't have the cash flow to support what cloud providers are charging and prefer to keep infrastructure as a capital expense. Over the decades I've noticed that IT changes, but never goes away.

    3. Re:"IT" is on its way out by BigBuckHunter · · Score: 5, Insightful

      Where it runs is irrelevant. You still need architects and user support. You still need migration consultants. And you still need custom code written...

      Indeed, and all of those positions rule out a huge percentage of IT workers. If you cannot code, interface with humans, or are not an SME, then you're out of the game. IT workers with the initiative to evolve their skills into devops survive. I personally want to thank AWS for making the EC2 API so convoluted that it is too challenging for normal humans to operate.

    4. Re:"IT" is on its way out by roman_mir · · Score: 5, Interesting

      It's amazing that this story is posted so close to the HP firing story because the same comments apply.

      People may say that there is no need for anything new, the old stuff works great, doesn't need to be replaced and such nonsense. It all comes from major misunderstanding of the economics. People don't necessarily buy new shoes or suits or mattresses, etc. because the old ones can no longer be used. People do it because they follow trends, because other people do it but most importantly because they have ability to do it, they have the means - money to do it.

      The real reason for all of these firings and shut downs is the stagflationary environment - high inflation and high unemployment, low savings and low rate of business formation, inability to put together the capital needed to start new businesses, to evolve existing businesses, to get the people to spend where they are already spending whatever they are making on food, energy and shelter. The growing expense on these items (food, energy and shelter) is completely tied to the level of inflation (expansion of the money supply without an underlying expansion of productivity).

      The people are unproductive, they are becoming more unproductive by the hour and so they are unable to earn enough to replace their toys because they are struggling to make ends meet.

      The reason the people are unproductive is lack of savings and thus lack of capital investment that is inherent in the system that destroys savings and prevents capital formation. The money comes into existence not because of business ventures but because the governments guarantee that money will be created and propagated through the system and they do so by suppressing the interest rates and yields, they do so by growing expenses paid with borrowing rather than with production, they do so by destroying the future of the economy by sacrificing the seed corn to pay for out of bounds consumption today.

      You have an economy that is in a massive depression actually and you are not even noticing it because of the artificial money creation that pushes up stock and housing prices. You are being bombarded with nonsensical 'economic' data that crowds out the real economic data that is important: the real negative interest rates, the real negative GDP, the real double digit unemployment numbers, the real lack of productivity due to the government intervention in the economy in every way, from businesses laws and regulations to income and wealth taxation to massive spending on government initiatives done with money that is borrowed from the future, thus crowding out legitimate business borrowing.

      With all the USA job numbers that come out, the only silver lining is that some government jobs also are sometimes cut, a thousand here, another thousand over there. That's the only beam of light in this otherwise bleak situation.

      --
      You can't handle the truth.
    5. Re:"IT" is on its way out by swb · · Score: 5, Interesting

      I've worked on a projects where cloud-outsourced systems got brought back on premise because cloud pricing was just too expensive. A capital outlay to migrate the entire environment on-premise paid for itself in 2 years.

      I'm currently working with a customer to finish an on-premise server refresh that they wanted to do cloud with (hey, cloud is free, right?) but the pricing on deploying their application in the cloud was double annually what the capital refresh was on premise.

      This specific client has a home-grown application for which there is no commercial replacement, it's only real failing is that the architecture is too monolithic but the economics of a top-down rewrite for cloud-friendly deployment don't work, especially on the timelines that would be needed.

      I don't think this is some weird exception, either, I think it's extremely common. I'm sure there is a whole world of cloud-oriented applications out there, but there's decades worth of on-premise IT that's working well and isn't moving into any kind of cloud environment any time soon, either.

  2. One man's loss... by Anonymous Coward · · Score: 5, Interesting

    I wonder how many of these are actually cut positions versus outsourced replacements (H1Bs, etc)?

    1. Re:One man's loss... by Anonymous Coward · · Score: 5, Insightful

      I find it interesting that there is a critical shortage of STEM workers coinciding with a tech bubble. If that's true, what's the point of encouraging STEM paths in college? Those jobs won't be there anymore if/when the bubble bursts.

  3. "Always remain unemployed" by ITRambo · · Score: 5, Interesting

    "They will always remain unemployed", referring to laid off tech workers, neglects to give most of them enough credit for being able to start their own businesses or to find a position at a smaller firm that needs their skills, probably for less money. But, to imply that they'll be obsolete is disingenuous.

    1. Re:"Always remain unemployed" by __aaclcg7560 · · Score: 4, Insightful

      But, to imply that they'll be obsolete is disingenuous.

      Tell that to the recruiters and hiring managers. I was out of work for two years (2009-10), where hiring managers told me I was overqualified for minimum wage jobs and recruiters told me I was unemployable for everything else. When the number applicants per job opening dropped from seven in 2009 to three in 2011 (full employment is two), I got hired for a full time job the day after my Chapter Seven bankruptcy got finalized.

    2. Re:"Always remain unemployed" by bluefoxlucid · · Score: 4, Informative

      "Starting your own business" only works if there's a market. To be more complete (but still horribly undetailed to the point of inaccuracy): there's a total amount of income each year and, thus, a total amount of spendable money in one year's time frame, and what can be sold is what can be produced for less than that amount of money. Products are made by labor time, labor time incurs wages, wages are paid out of revenues, revenues come from consumer purchasing, purchasing comes from income.

      A new business either draws purchasing away from an old business or it competes for new purchasing available as population or productivity (amount of stuff made per labor-hour, thus decrease in cost and thus price relative to number of spendable consumer dollars) increase.

      More to the point: unemployment has decreased during 2016. The labor force participation rate has increased by 0.5% since September 2015, and the number of employed Americans has increased by 3 million while the number of unemployed Americans has increased by 0.014 million (we didn't add as many jobs as we added people in the workforce, but we added more jobs than the proportional employment rate, thus the unemployment rate went down, the number of employed went up, and the number of unemployed also went up).

      Per the past three months, the number of unemployed increased by 0.169 million since July 2016, while the number of employed increased by 0.469.

      [...]some 330,000 in all at major tech companies.[...]

      [...]"The layoffs I predicted have been occurring." And worse, he says, these laid-off workers are never again going to find tech jobs: "They will always remain unemployed," at least in tech, he said. "Their skills will be obsolete."[...]

      I don't see 330,000 newly forever-unemployed IT workers. That would be literally 8.25% of the computer and mathematics workforce. We'd be talking about 13% unemployment today.

      Unfortunately, I don't have occupational employment statistics newer than May, 2015. At that time, employment in computer and mathematical occupations number 4,005,250. Some longer-term analysis includes charts that show only normal fluctuation, although computers and mathematical has a long-running up-trend and a current down-trend not substantially different from 2008-2009.

      --
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  4. So what else is new? by Anonymous Coward · · Score: 5, Insightful

    The tech bubble has popped before, and it will pop again. That is just the natural respiration of our economy.

    I am sure many of the laid-off workers can update their skillsets and find new jobs. Or some can go ahead and retire. The remaining ones can find accept a non-tech job at lower pay or unemployment.

    And life will go on for everyone.

  5. H1B by Anonymous Coward · · Score: 5, Insightful

    Yet 'we can not find anyone'

    Most of the layoffs you are seeing are not material but cost cutting. Meaning the job just went to someone 10x cheaper. Companies will again learn 'you get what you pay for'.

  6. Kill offshoring with fire then... by sethstorm · · Score: 4, Insightful

    If there's a war on citizens wrt tech employment, then remove the means to exclude citizens.

    --
    Twitter supports and protects racists - by smearing their critics with the "Hate Speech" label.
  7. Re:Tech workers always have to stay current. by __aaclcg7560 · · Score: 4, Interesting

    I was out of work for two years (2009-10), told I was unemployable by recruiters, and got a full-time IT support job in 2011. As far as job skills were concerned, nothing changed during those two years.

  8. Given that somewhere a queen is weeping... by Pseudonymous+Powers · · Score: 5, Insightful

    Early this year, analyst Trip Chowdhry from Global Equities Research predicted that the tech world was going to see big layoffs in 2016 -- some 330,000 in all at major tech companies... So, was Chowdhry right? "Yes," he told me when I asked him this week. "The layoffs I predicted have been occurring."

    I call bullshit on this guy. There's a table of predicted versus actual layoffs in the article. Of the 14 companies he made predictions about, only four of them seem to have any actual layoffs, and the actual numbers are generally a fraction of the predicted number. Layoffs for companies that he didn't even make predictions about are given, in an apparent effort to buff his credibility, but some of those companies are not exactly household names (WTF is "Zenefits"?), and as for the rest, their predicted layoffs are in the 5-to-10 percent range.

    Not that further layoffs are necessarily unlikely, especially with this presidential election coming up. But it's already October, and it's been nowhere near as bad as this clown predicted. You don't get to say you were right when the data proves you wrong. You don't get credit for predicting layoffs in 2016 if they happen in 2017. You don't get to just make a blanket prediction like "layoffs will happen in the future" and get points when they eventually happen.

  9. I think these predictions are questionable .... by King_TJ · · Score: 5, Interesting

    First off, the person who commented that it's "predictable when newer isn't better" is correct. Right now, I.T. technology is stagnant. IMO, that's not a bad thing either. What's happening is, just as many people are using computers and electronic devices as ever -- but the market has matured. There's a very low level of "techno lust" for the latest and greatest, because truthfully, what's already readily available is good enough for everything people want to do with their machines right now.

    There's finally some sanity in corporate America, where technology is getting replaced on a schedule that reflects the time-frame it takes for the old gear to physically wear out, instead of demands for 2-3 year replacement cycles just because "the new thing is already old, since it can't run the cool new OS and new versions of apps X and Y".

    And really, HP's situation is a different/unique one in the current round of layoffs. HP split their company into two, not long ago, realizing they had to jettison the "boat anchor" of printing/imaging so it didn't weigh down profits of the rest of the business. The HP doing all the layoffs now is the one holding the bag selling printers and scanners. They've also tried to acquire other printer manufacturers like Fujitsu, but ultimately, they're selling a product that's gone from a "must have" companion purchase with every new PC to a niche need. Their investment in 3D printing didn't appear to pan out either. (I think that's turned out to be a niche hobbyist interest, since it's still a very slow process to print a 3D object, the size of said object is really limited, AND it won't realize its full potential until there are much larger collections of downloadable projects to print. If all the major manufacturers of appliances offered a way to print repair parts on their "support" web sites, for example? Then you'd see 3D printing really take off.)

    But claiming the people who get laid off have no future in I.T.? That's FUD, plain and simple. The trend to cloudify everything is still strong, but I've worked in the field long enough to say I'm confident it's going to trend back the other direction in the next decade or so. If you just look at the ridiculous number of data breaches in the news in the last year or two, you quickly see the problems with concentrating a large number of customer's data in one place. But hacking aside, the cloud services amount to giving up direct control over big chunks of your business operations. When one of these services has an outage, you can't do anything but sit around and hope they actually provide some status updates to pass along to your users and to management. Everyone's first question is "When will it be back up?" and you're stuck shrugging and saying, "Beats me! We're at the mercy of the provider." When this happens enough times, companies start demanding some more accountability and control. And you tend to get locked in to these services too. So if they raise prices or change pricing structures, you can't do much besides pay the new, higher bill (or go through a huge, unplanned project to migrate all the data elsewhere and retrain everyone on how to access it). I'm not sure how a cloud provider decides someone with many years of general I.T. experience, including such things as administering servers, troubleshooting networks and supporting staff wouldn't have skills applicable to working for their business anyway? But cloud is an overrated buzzword, either way.

  10. Which Skills? by elfsternberg8092 · · Score: 4, Interesting
    None of the articles I've read on this theme list the skills are going to be out-of-date. Which skills? What disciplines?

    In 2008, I was laid off after 8 years at a large company, and I'd been using the same tools for those 8 years. As a front-end developer for dev-ops shops, my skills were woefully out-of-date: We'd been using Sencha (JS) and Webware (PY), with some Python 2 Python-to-C libraries. I knew nothing about what the cool kids were doing. I sat down and in a few days taught myself Django and jQuery; I rebooted by SQL knowledge from my 90s-era experience with Oracle and taught myself the ins and outs of Postgresql.

    And then, in the bottom of the recession, I took shit contracts that paid very little (in one mistake, nothing) but promised to teach me something. I worked for a Netflix clone startup; I traded my knowledge of video transcoding for the promise of learning AWS. I worked for a genetic engineering startup, trading my knowledge of C++ for the promise of learning Node, Backbone, SMS messaging, and credit card processing; a textbook startup, trading my knowledge of LaTeX for the promise of learning Java; an advertising startup trading my basic Django skills to learn modern unit testing; a security training startup, trading my knowledge of assembly language in order to learn Websockets.

    The market improved. I never stopped learning. I gave speeches at Javascript and Python meet-ups. Recruiters sought me out.

    I've been at another big company for four years now. Will things go to hell in March? I don't care. I have the one skill that matters.

  11. Ok time to stop H1B's! as clearly they are not nee by Joe_Dragon · · Score: 5, Insightful

    Ok time to stop H1B's! as clearly they are not needed when USC's are being layed off.

  12. Stupid not to retrain college grads by WillAffleckUW · · Score: 4, Insightful

    Seriously, "never ever going to work in tech", give me a break.

    The point of a college degree is to teach you how to learn, and to have basic skills in a field.

    You don't get rid of MDs just because they aren't "up to the latest tech", they take a few CMEs and go do a slightly different version of being a doctor.

    Same with Nurses.

    Same with Biologists.

    Same with Computer Scientists.

    The problem is the employers being too lazy to train people, and using it as an excuse to outsource.

    --
    -- Tigger warning: This post may contain tiggers! --
  13. what skills are we talking about? by Anonymous Coward · · Score: 4, Insightful

    "They will always remain unemployed," at least in tech, he said. "Their skills will be obsolete." Some of these layoffs are due to a sea change in the industry, as it transforms to the world of mobile and cloud.

    The fact that someone sees a transformation to "mobile and the cloud" as a significant change in the skills required, makes me wonder just WTF skills these workers really had, even in their old jobs. Programming is programming.

    It's true that sometimes a different environment has different constraints (e.g. I have more RAM on a phone than I have inside the Apache process on a much bigger server) but it's not really all that big a deal to adjust for, is it? So you're taking different approaches to caching -- you might have to unlearn some habits and learn some new ones (suddenly, CPU is expensive and RAM is cheap -- or vice versa).

    How are skills being obsoleted? I don't get it. The more tech advances I see, the more I'm convinced that hardly anything is ever really changing much at all.