Why are layoffs on the rise?

Why are layoffs on the rise?

Last year, layoffs were the most dominant word in the news industry. It has set up a new trend for businesses as uncertainty hits the job market across the globe. According to recent data from late July, more than 32,000 workers in the US tech sector have been laid off so far this year. As layoffs are sweeping across the tech industry at an alarming rate, we hear about major tech companies and startups laying off employees as part of their business operations. Why are layoffs happening? This is the biggest question of the time. Let's have a look at the issue more clearly.

Understanding layoffs:

Layoffs are not based on performance; rather, the employer suddenly terminates a large number of employees without providing any valid reason. It is solely a decision of the company if they want to cut off a section of people or individual employees.

What are the reasons behind company layoffs?

With the ongoing needs of corporate firms and their financial status, there is a need to lay off employees. It is because of a transformation in company structure and strategies. During the pandemic, mass hiring affected companies as there was less work and fewer employees, affecting their finances.

1. Fund losing:

A reason for layoffs is companies' losing their funds, either from investors who changed their minds or a decrease in sales. As the company is no longer in a state of profit and is unable to provide salaries to its employees, they have to go on layoff. However, it is temporary. After regaining investments and profits, a business can again be secured.

2. Business shutdowns:

Shutting down the business due to immense losses is another reason for layoffs. They cut off their workforce in layers and kept only the most crucial employees. If there is still no recovery, they shut down the whole business.

3. Relocation:

If a company or business decides to relocate to a new place, maybe out of the country or to a better place, employees are also laid off. The employees who are unable to shift to a new place are either given voluntary exits or simply laid off to find a convenient opportunity for them.

Here are a few examples of recent mass layoffs we heard about in the news.


A digital mortgage company was seen laying off not just once but multiple times in a span of one year. After firing around 4,000 employees in the US and India till now, as per a report, they have even offered voluntary exits to some of their employees.


The ed-tech startup Unacademy was also a hot potato recently for laying off around 10% of their workforce, which means around 600 employees. It was probably due to a funding slowdown.


Netflix has also announced huge layoffs, giving a reason for their slowing revenue growth, due to which they have to lay off their 150 employees. They said they would support their employees through this difficult transition.

Now that you have read about the process and reasons why layoffs are on the rise, get ready for the new trend of corporate downsizing. It is a very crucial time to understand the need for such practises as job cutting and mass layoffs. We all should get ready to accept it as a part of the culture.


Drop your comment