The Sky is Not Falling in the Technology Sector

The internet is a beautiful place. At any moment, you can look up any piece of information. For instance, if you want to learn about penguins, you can visit this Australian website to get the latest news. Likewise, if you are searching for a different kind of wildlife, you can check out a furry convention in the American mid-west. The volume of information is so staggering that it can often induce a feeling of paralysis. The reason for this paralysis is that high-quality information usually exists side by side with rumors, speculation, gossip, and outright falsehood. It takes a skilled eye to tell the difference between a meaningful piece of information and something you can safely ignore. The current economic news out of the technology industry is another example of this information tsunami. Today I want to put the hysteria in context. 

It has been a bad week in the technology sector. Google's parent company Alphabet laid off 12,000 employees, and Capital One gave 1,000 agile employees notice this week. The news was so bad that it became a topic of conversation at my company's lean-coffee meeting. What is going on and why?

The easy answer is that technology companies were over-hired during the COVID-19 pandemic. The workers needed to accommodate binge shopping and streaming with people stuck at home. As things began to return to usual, those people were no longer necessary, and capitalists decided to shrink their workforces. We also witnessed companies paying the price for making poor decisions. For example, Amazon grew its warehouse operations too quickly and now must cut back. Another poor choice was Mark Zukerburge creating a fifteen billion dollar money pit called the metaverse. Sooner or later, companies have to face economic reality and cut back on jobs, particularly if they lose money. 

It is easy to get caught up in the gloom and doom. In the wake of this bad news, the internet and social media have been filled with plenty of poor takes on what is happening. Most people need to understand that even with these layoffs, there is a shortage of people who know how to write software and maintain the complex networks and databases that run the global economy. The prospects of these people who are collateral damage in the economy today have the skills and expertise that many companies today demand to be competitive. It stinks to get fired or laid off, but they will bounce back better than before.

A worse take is that it is payback for years of employee entitlement in the technology sector. I even see articles claiming CEOs rooting for Elon Musk and his desire to transform the Twitter workforce into a 'hardcore' team. As a survivor of the dot.com crash of the early 2000s, what is happening is a natural cycle of boom and bust in technology. Venture capitalists want to earn money from their investments, and shareholders need to receive dividends. The cutback in staffing and perks is a natural result of the tension between the demands of workers and business owners. As the talent pool becomes more shallow, I expect bonuses and perks to come back. 

The final lousy take is the layoffs at Capital One represent a rejection of Agile as a way of delivering software. I am not on the inside of the organization, but it was clear to me that the company was paying lip service to agility while not doing what was necessary to be successful. I liken it to a person unwilling to exercise and eat better with the expectation that they will lose weight. Sjoerd Nijlan points out on Medium that the callous nature of laying off the entire agile staff at Capital One looks more like an admission they were unwilling to change than a failure of agile. Frankly, I want to hear from people on the inside to understand the experience of attempting to transform a company that was unwilling to change. 

These layoffs take a severe toll on the people who used to work for those companies. Layoffs impact not only the former employees but also their families and communities. Empathy and understanding are necessary for these folks going through a difficult time. We also need to acknowledge that while they are suffering, these workers will be back in the workforce because they have skills that are in high demand. The sky is not falling for the technology industry and agile; instead, it is one of the many cloudbursts in the turbulent atmosphere of technology and capitalism. People will get rained on, but the good news is that most of us have umbrellas and a place to find shelter until the storm passes. It will pass.

Until next time.