Introduction:
As we step into the new year, 2024, let's reflect on 2023 and speculate about what the upcoming year may hold. The year 2023 has been one of rapid evolution and surprises in the tech industry, witnessing the emergence of numerous new AI companies and the rapid adaptation of others into AI-centric entities. However, despite the tech sector experiencing one of its most disruptive years, it was also marked by despair in terms of jobs activities. Instead of an anticipated upward trend, the industry faced unprecedented layoffs, a situation never witnessed in history.
Macro-economic trends and uncertainties that began in Q3 of 2022 persisted into 2023, with many tech companies downsizing their workforce due to challenging economic conditions. This downturn not only impacted hiring and firing but also had a notable effect on startup funding, reaching its lowest point in recent years.
2023 - What a Year it was:
The defining characteristics of the year include a substantial number of layoffs and a significant decline in startup funding. A brief overview:
Year of Tech Layoffs:
In 2023, the tech industry witnessed over 260,000 jobs lost, a 50% increase from 2022, and the trend that continued till the end of year. Notably, Spotify announced another round of layoffs in the first week of December, affecting 17% of its workforce, totaling 1,500 employees, Twilio also announced another round of layoffs with 5% reduction in workforce in December, and PayTM announced 1,000 job cuts in the last week of December.
2023 Layoff Timeline:
January: Peak of layoffs, with nearly 90,000 jobs eliminated.
September: Lowest number of layoffs, with less than 5,000.
October, November and December: Surge in layoffs, exceeding 7,000 each month.
Source: Layoffs.fyi
Big Tech Layoffs (FAANG+):
Major tech giants, including Meta, Google, Amazon, Microsoft, Apple, and Netflix, implemented workforce reductions. The total job cuts at big tech since the start of 2023 exceeded 50,000, excluding the layoffs declared at the end of 2022, which surpassed 21,000.
Conservative Funding in 2023:
The challenging conditions did not spare startups, resulting in the lowest investments in the last five years in 2023. This was despite the rise of AI and rapid technological evolution.
Investment in the Indian startup ecosystem plunged to $10 billion in 2023, marking a 60% drop from $25 billion in 2022 and a staggering 76% below the 2021 peak of $42 billion. This represents the lowest investment level in seven years, reflecting a harsh reality for many startups as global economic factors and specific challenges within the Indian market dampened investor appetite. The decline led to fewer funded companies, smaller funding rounds, and even layoffs in some sectors.
Source: inc42.com
The decline in funding, particularly at early and seed stages, has forced startups to control costs, impacting their hiring activities.
2023's Startup Massacre: the Dream Over -
In 2023, a brutal cocktail of macroeconomic headwinds and other challenges forced over 3,200 venture-backed startups in the US to close their doors, representing a staggering $27 billion in wiped-out investments. The Indian startup ecosystem also felt the ripples of these global economic challenges, witnessing the closure of more than 15 startups that had collectively attracted over USD 200 million in investments.
What to anticipate in 2024?
As we step into a new year, let's delve into the forecast for 2024, considering what we know and what we can expect in the coming year:
Hiring Trend:
In recent weeks, there have seen positive signs as many companies, including tech giants like Google, Meta, Amazon, Microsoft, and Salesforce etc., have resumed hiring activities. Startups are also joining the trend, with many beginning to hire for scaling operations.
While thousands faced layoffs in 2023, certain industries remained resilient and continued to grow. These include healthcare, retail, financial services, insurance, manufacturing, and more. So expect more growth in these industries.
Technologies are evolving at an unprecedented pace, and certain skills are poised to create substantial job opportunities. Areas like AI, 5G Connectivity, and Augmented and Virtual Reality are expected to dominate and experience rapid growth in the coming years, complementing the ongoing demand for software engineering skills.
Tech Story:
India Tech Growth: India's IT exports surged by an impressive 8% year-over-year in 2023, reaching a record high of $245 billion. This stellar performance, signals a robust Indian IT landscape that suggests a promising trajectory for both exports and potential future hiring in the sector.
Geographical Expansion: India, in particular, has witnessed global companies investing in opening tech offices. Notable examples include Coupang, DocuSign, Okta, and Roku, among others.
Hot Bets of 2024: Let's take a look at some technologies that investors are eyeing for future investments: GenAI, EVs, Climate Tech, Fintech, and Cybersecurity are among the sectors expected to capture investor attention, showcasing significant growth potential.
Risk Evaluation & Emerging Talent Trend:
The tech talent pool has faced hardship in 2023, leaving many without jobs for extended periods and struggling to make ends meet. This challenging situation has prompted individuals to rethink their future, leading to a potential trend of professionals opting for multiple remote jobs alongside a full-time position to ensure financial stability.
Conclusion:
After 2023 marked by significant challenges, the tech industry enters 2024 with cautious optimism. The year holds the promise of a fresh start, with economic indicators suggesting potential growth, companies signalling renewed hiring plans, and the potential for continued innovation in key areas like AI. While uncertainties remain, the industry's resilience and adaptability offer reason to believe that 2024 could be a year of positive momentum.
Feel free to share your thoughts on what 2024 has in store. Will it continue the gloomy trend of 2023, or are we poised for a recovery and upward growth?
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