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Monday, December 11, 2023

Boom to bust: Why layoffs plague tech industry after Covid hiring frenzy


Microsoft is streamlining its workforce, which reflects a broader trend in the technology industry as companies adjust their workforce to align with their revenue and customer demand. The tech industry has been hit by mass layoffs indicative of the current economic conditions, which have been affected by inflation and other macroeconomic factors.

In a move that stunned the African technology sector, Microsoft fired many of its developers in Kenya as part of its global plan to reduce 10,000 positions. The company’s African Development Center (ADC) branch, which started in Kenya and Nigeria in 2019, had pledged to invest $100 million over its first five years and to employ more than 500 employees by June 2022.

The layoffs are viewed as a significant setback for Africa’s technology sector, which has been expanding quickly lately. The local tech sector is alarmed by the layoffs, with some raising questions over the possibility of losing qualified staff that will hinder the sector’s expansion. A number of ex-Microsoft employees in Kenya have posted on LinkedIn to voice their anger and displeasure at the company’s choice.

Kenya’s developing technology industry has taken a hit due to Microsoft’s decision to fire staff there. Yet, there are still chances for growth and development, and cooperation between the public and private sectors will be necessary to preserve the sector’s survival. Notwithstanding the industry’s considerable hurdles, Kenya’s technology sector has the potential to significantly contribute to regional economic development and innovation with the correct policies and assistance.

One of the most notable recent developments has been the expansion of Kenya’s technology sector, which has seen some successful start-ups locate there. There has been a boom in demand for skilled individuals in the sector as a result of the government’s promotion of innovation and entrepreneurship. However, the sector faces several obstacles, such as the need for legal frameworks and access to funding.

Despite these difficulties, Kenya’s technology industry has expanded quickly, and the future looks optimistic. Incentives for start-ups and support for incubators and accelerators are just a few of the government’s recent efforts to foster innovation and entrepreneurship. International businesses that have seen the potential of the African market, like Microsoft, have also begun investing in the industry.

There are worries about how Microsoft’s move to fire some of its Kenyan developers may affect the expansion of the industry. It is also acknowledged that the industry is still developing and has the potential to grow significantly over the next several years. Kenya’s technology sector has the potential to grow into a significant player in the global tech industry with ongoing funding and assistance from the public and private sectors.

Techies have blamed a couple of factors for the rapid changes being felt in the tech sector. The COVID-19 epidemic is reported to have sparked a quick shift to digital, which increased the demand for technology and technical talent. Companies made significant investments in technology to keep up with the growing demand brought on by the shift to remote work and the development of e-commerce. As a result, the Tech sector went into a hiring frenzy, with many businesses growing their staff to meet the demand.

However, as the world’s economy strengthens, businesses are pressured to reduce expenses and boost profits. As a result, several tech companies are currently cutting staff. In Seattle, Microsoft recently let go of 10,000 employees to “match our cost structure with our income and where we sense consumer demand.”

Companies frequently turn to layoffs as a means of cost-cutting when profits are down. Tech companies are under pressure from investors to cut costs as sales decline. Venture capitalists (VCs) are also concerned about profits declining this year following the significant growth observed during the pandemic.

Correcting the hiring of too many workers during the pandemic has contributed to the spike in layoffs. The increase in online activity delivered tech firms record-high revenues, prompting teams to expand to meet demand. Nevertheless, as the pandemic recedes, businesses are starting to realise that this expansion is unsustainable and are taking steps to match their cost structures to their revenue streams and customer demand.

The increase in tech layoffs also brings to light the sector’s issues, such as the need for regulatory frameworks and finance availability. As the pandemic hastened the digital transformation, it has also highlighted infrastructure gaps and unequal access to technology, especially in underdeveloped nations. Governments and industry leaders must collaborate to address these issues to ensure everyone can benefit from technology.

Layoffs in the technology sector reflect the global economy’s drive towards profitability and cost-cutting. A hiring frenzy resulted from the pandemic’s spike in demand for technology. Still, as the economy is gradually recovering, businesses are moving to align their cost structures with sales and customer demand. To ensure that everyone can benefit from technology, addressing the issues affecting the tech sector, such as the need for regulatory frameworks and funding, is important. (

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