Thousands of employees have been laid off so far in the tech sector globally

Across the world, tech companies are downsizing in a post-pandemic retrenchment drive.

So far, approximately 154,000 employees were laid off in 2022, with a further 25,000 already laid off in 2023.

Big tech companies such as Amazon have confirmed that they are cutting 18,000 jobs, mostly in its e-commerce division, while Salesforce, a software giant, announced that it is laying off 10% of its workforce, Microsoft have announced a further cut off of 10,000 jobs while Meta laid off a further 11,000 people in the last quarter of 2022.  

While there have been various speculations on the driving forces behind this surge in layoffs, the anticipated economic downturn has been largely to blame after an aggressive hiring period during the pandemic.

Tech layoffs in Africa are cutting across startups and big tech companies

Across the continent, layoffs have also continued to cut across big tech companies as well as startups. Twitter for example has already laid off 80% of their staff in their headquarters in Ghana. Furthermore, Meta’s content moderation partner’s (Sama) move away from content moderation in Nairobi is also set to result in layoffs of up to 200 staff members. 

On the other hand tech startups such as Kuda, Wave and 54 gene recorded layoffs of approximately 5%,15% and 30% of their workforce in 2022. In addition, others such as Twiga Foods already announced plans to downsize by laying off approximately 200 staff while startups such as Notify Logistics closed operations altogether.

Layoffs will directly impact office vacancy rates

With the trending forecasts in the global economy being that of a global recession, 2023 could result in more layoffs than 2022 directly impacting the office sector.

In a previous review of the top 50 tech(start-ups and multinationals) companies in each city across Lagos, Nairobi and Johannesburg, Estate Intel  found out that 94% of these companies occupy a formal working place. 85% occupying leasable space, 3% occupying co-working spaces and 4% occupying owner occupied offices. Only 6% were fully remote companies, echoing the rhetoric that indeed the tech sector is a key demand driver for the office sector.

In addition, tech companies often occupy some of the premium office buildings in key markets such as Kings Tower and Heritage place in Lagos and Delta Corner and Dunhill Towers in Nairobi hence propping up the cities’ rental rates.With increased downsizing efforts, this will inadvertently lead to a growth in vacancy rates for the office market.

Declining disposable income will impact on housing take up

With tech emerging as a leading employer, it has also inadvertently steered demand in housing especially key innovation hubs such as Westlands in Nairobi as well as Ikoyi and Victoria Island in Lagos. As such, massive layoffs will undoubtedly impact on individuals’ affordability across key residential submarkets, also resulting in higher vacancy rates.

All hope is not lost, with the hunt for talent still rife.

 

On the flipside, all hope is not lost as the hunt for talent remains rife amidst ongoing layoffs. Key tech employers are continuing to recruit for specialist tech skills as they let go of general skills. Kenya’s large blue chip companies especially in the banking and telecommunications sector have been the most notable scouters of tech talent. For example, Safaricom, Kenya’s leading telecommunication company hired over 400 software developers in 2022. Similarly, tech companies in Nigeria have continued to hire talent amidst the layoffs with an aim to build talent that is integral to their product offering.

Still, it remains to be seen the impact that these recruitment initiatives will have on the overall downsizing initiatives of companies and office occupancy. 

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