The New Tech Normal
On August 1, 2024, Intel decided to reduce its headcount by more than 15% (approximately 15,000 employees) by the end of the year. On August 19, GM planned to lay off over 1,000 employees in its software and services division to streamline operations, according to CNBC. By the end of August, Bloomberg reported Apple to cut about 100 jobs, including some workers from its Books and News apps in the Online Services Group, as priorities shift. By now, tech layoffs have become so common that such news is no longer surprising. Nevertheless, many families and lives have been changed forever overnight. All the best for whoever affected.
I experienced this firsthand in 2009 as Motorola “made me redundant”. It didn’t matter how I did well or poor; it was just business. But don’t let that define you or affect your spirit. Even when faced with a one-way door, there’s always another choice. To be fair, the Moto layoff did accelerate my transition from building feature phones to making smartphones. Now might be the time to open another window to make your heart sing again. Psst! Why not augmented by AI. It won’t be obvious at first. Because it’s so early, and that’s why it’s fun & very rewarding. Just keep trying and don’t settle. You will eventually find your calling to fulfill your destiny.
How Are We Ending Up Here?
“you only find out who is swimming naked when the tide goes out.” — Warren Buffett To the Shareholders of Berkshire Hathaway Inc. in 2001.
After the cheap money tide goes out, we now know most of companies, tech included have been swimming naked for a long time. What is the most valuable asset of a tech company? It used to be talent, but now the answer has changed. Executives and the management chain should bear the most responsibility, at least in proportion to their compensation. However, that’s not something we can control, aside from choosing yours wisely. Nevertheless, we can adapt to the new reality. e.g. bewaring of a few key macro factors:
- High interest rates: This may be mitigated somewhat after September if rates are cut. “The time has come for the policy to adjust,” said Fed Chair Jerome H. Powell at the Jackson Hole Economic Symposium on Aug. 23.
- Meeting street expectations: Since 2022, Twitter has been cutting down its workforce drastically, reducing from about 7,500 employees to less than 2,000 at a point of time. Wall Street seized the opportunity to demand all companies to follow a such playbook. The Pandora’s box has been opened. One may try to close it. But, why, isn’t there a better thing to do?
- Precautions against recession: This could be mitigated by a lower interest rate with some latency.
- Over hiring during the pandemic: This should largely be addressed by now.
Becoming Stronger From Now On
Now that Fed Chair Powell is confident that inflation is under control, he will focus more on “the unmistakable cooling in labor market conditions”. This is good news for the job market as a whole. However, for individual tech workers, it may be beneficial to embrace the new normal: outsourcing & offshoring “Software 1.0” to invest “Software 2.0”.
Such outsourcing & offshoring are neither new nor the last of their kind. In the 1990s, the Internet and telecommunications boomed, leading to the rapid growth of IT-enabled offshoring services. Now as businesses survived Covid-19, many jobs can now be done remotely. So, why should companies keep such jobs in expensive regions?
The Only AI Hope
AI is the only hope because its talent is still a rare commodity. In August, Business Insider reported: on average, an AI software engineer is paid up to $378K, about $123K more than the overall US average, according to a leaked spreadsheet from hundreds of Microsoft employees. Sure, there will be a lot of hype and up & down. Just as there was during the Dot-com bubble in the late ’90s. Eventually, a few internet giants came out to “eat the world”. Now you know the future direction, what should you change to adapt better?
