By Alexander Chiejina
"As revenues decline, investors want businesses to cut costs. Investors may have objected to corporations like Meta and Microsoft due to their huge headcount in comparison to other businesses. Even while there doesn't seem to be much proof that layoffs can be the panacea for a company's problems, they have still evolved into the short-term default option. Therefore, firms continue to use layoffs as a justification to increase profits, regardless of an organisation's true profitability, the report said.
There is a current revenue decline, despite the fact that most tech companies went on a hiring boom during the Covid-19 epidemic when lockdown spurred a tech buying spree to support remote labour and an increase in e-commerce. According to market research firm Gartner, even while corporate software and IT services are likely to expand the fastest in 2023, overall IT spending growth will still be modest, with data centre systems and communications services expected to grow by less than 1%. Meanwhile, a drop in hardware sales is anticipated.
Nigeria has recently had the weakest funding season thus far in 2023. The entire investment for companies in Africa, which included debt and equity deals spanning 764 rounds, was estimated at $6.5 billion in the 2022 fundraising report by the venture capital firm Partech. 693 deals totaling $4.9 billion were equity transactions.
However, the data showed that from $5.2 billion in 681 rounds in 2021, the overall equity funding in the region decreased by six percent.
Some industry analysts see the huge layoffs, which they predict will continue, as a chance to establish the market on a solid foundation rather than one that is fueled by hype. It is stated that many tech businesses that received a lot of money hired more staff than they could support. As a result, firms are using layoffs as a tactic to rebalance the scales. Along with over-hiring, several tech firms also abruptly increased compensation to prevent their top employees from being lured away by much higher offers from larger firms. As a result of the fierce rivalry for elite talent, salaries reached historic highs.
Adedeji Olowe, the founder of Lendsqr, stated that the COVID-19 saw a rise in digital and technological services. However, this resulted in a rise in the demand for IT services because many individuals believed that the need would continue to rise and that tech companies would over-staff as a result.
Additionally, monies were raised at premium valuations. Things are more tranquil now that everything has returned to normal, and reality is starting to reset things. Exuberance surrounding COVID-19 led to an increase in over-hiring. People are now losing extra weight. The truth is that technology is still fantastic, but both interest and the economy are returning to normal. Everyone will move on after the market resets, Olowe continued.
The fact that many of the layoffs affect non-technical employees is good news for those in the IT industry. In truth, corporations have been increasing IT professional compensation due to a dearth of skilled tech talent. According to consultant Janco Associates, raises for IT experts may increase by 8% in 2023.
- Over-hiring, decreased investors spend, impending recession seen as drivers for this challenge.
"As revenues decline, investors want businesses to cut costs. Investors may have objected to corporations like Meta and Microsoft due to their huge headcount in comparison to other businesses. Even while there doesn't seem to be much proof that layoffs can be the panacea for a company's problems, they have still evolved into the short-term default option. Therefore, firms continue to use layoffs as a justification to increase profits, regardless of an organisation's true profitability, the report said.
There is a current revenue decline, despite the fact that most tech companies went on a hiring boom during the Covid-19 epidemic when lockdown spurred a tech buying spree to support remote labour and an increase in e-commerce. According to market research firm Gartner, even while corporate software and IT services are likely to expand the fastest in 2023, overall IT spending growth will still be modest, with data centre systems and communications services expected to grow by less than 1%. Meanwhile, a drop in hardware sales is anticipated.
Nigeria has recently had the weakest funding season thus far in 2023. The entire investment for companies in Africa, which included debt and equity deals spanning 764 rounds, was estimated at $6.5 billion in the 2022 fundraising report by the venture capital firm Partech. 693 deals totaling $4.9 billion were equity transactions.
However, the data showed that from $5.2 billion in 681 rounds in 2021, the overall equity funding in the region decreased by six percent.
Some industry analysts see the huge layoffs, which they predict will continue, as a chance to establish the market on a solid foundation rather than one that is fueled by hype. It is stated that many tech businesses that received a lot of money hired more staff than they could support. As a result, firms are using layoffs as a tactic to rebalance the scales. Along with over-hiring, several tech firms also abruptly increased compensation to prevent their top employees from being lured away by much higher offers from larger firms. As a result of the fierce rivalry for elite talent, salaries reached historic highs.
Adedeji Olowe, the founder of Lendsqr, stated that the COVID-19 saw a rise in digital and technological services. However, this resulted in a rise in the demand for IT services because many individuals believed that the need would continue to rise and that tech companies would over-staff as a result.
Additionally, monies were raised at premium valuations. Things are more tranquil now that everything has returned to normal, and reality is starting to reset things. Exuberance surrounding COVID-19 led to an increase in over-hiring. People are now losing extra weight. The truth is that technology is still fantastic, but both interest and the economy are returning to normal. Everyone will move on after the market resets, Olowe continued.
The fact that many of the layoffs affect non-technical employees is good news for those in the IT industry. In truth, corporations have been increasing IT professional compensation due to a dearth of skilled tech talent. According to consultant Janco Associates, raises for IT experts may increase by 8% in 2023.