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When big tech reports job losses, what happens to the people?

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When big tech reports job losses, what happens to the people?
WATCH: When big tech reports job losses, what happens to the people? – Nov 14, 2022

Amazon is just the latest technology company to report layoffs.

Job losses have been confirmed at companies like Meta, Salesforce, Twitter and others; in recent weeks and months, big tech companies have been announcing unprecedented job losses ahead of a looming recession.

READ MORE: Why tech companies are cutting staff, and why you should care

Stella Alexandrova had been working at Canadian e-commerce tech company, Shopify, for over three years when she was told she had been laid off.

“You get the news and it’s this complete sinking feeling. I did not expect it and it was a complete shock,” she said.

“I needed to get outside and clear my head because [I was thinking], ‘What do you do now?'”
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“It was that feeling of loss. This is your whole life, your career … and it’s just not there anymore.”

In July, Shopify announced it would be laying off 10 per cent of its workforce.

CEO Tobi Lütke said in a letter to employees made public that the company had made a bet that the global retail transition to e-commerce, which picked up during the COVID-19 pandemic, would continue to accelerate.

READ MORE: Shopify to lay off 10% of workforce after pandemic growth bet ‘didn’t pay off.’ CEO says

The Ottawa-based company, which backs digital storefronts and provides a variety of e-commerce services to its merchants, had scaled up its workforce to meet the demand it projected, Lütke wrote.

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“It’s now clear that bet didn’t pay off,” said Lütke, taking the blame.

“Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that,” he said.

Shopify is one of many companies announcing mass layoffs in recent months; at the beginning of November, Meta announced it would be cutting 11,000 jobs.

Companies like Twitter, Hootsuite and Netflix also reported layoffs.

Layoffs.fyi, an online aggregator that tracks job losses in the technology sector estimates that in 2022, 788 tech companies conducted layoffs that impacted over 120,000 employees.

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Tech Talk: Facebook threatens to block news content in Canada

“Early on in the pandemic, we shifted our lives from the real world to the digital world,” said technology analyst Carmi Levy. “As that happened, we were scrolling on our social media feeds much more and we were seeing more ads and their revenues were going up. We were using apps to order things to our homes and businesses that we used to go out and get.”

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“So these companies grew by leaps and bounds because they had to meet that crush of pandemic-fueled demand,” Levy continued. “Now that we are on the far side of the pandemic … that is, reversing. To a large extent, we are going back to our previous habits and we are not leaning on our digital tools as much as we used to.”

READ MORE: How to rebound from a layoff in Canadian tech — ‘Control your narrative’

Harald Bathelt, professor of economic geography at the University of Toronto, said not all technology companies are experiencing a regression in growth.

“High-tech industries, manufacturing-related, computer-related and software development, is not what’s affected here,” he said.

“We are talking about the companies that are related to online commerce, to social media, and those companies have probably over-invested and are now having to downsize to adjust to the new normal.”

Even with the increase in job losses within the tech sector, Levy said there will always be a demand for technology workers in Toronto.

“I would not expect that these individuals would be looking for jobs very long,” Levy said.

“The tech industry has a strong legacy of entrepreneurship,” he said. “We often see tech industry employees being laid off and taking their severance packages and their savings and flowing that into a new business venture or a start-up.”

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READ MORE: Thousands of Meta employees to be impacted in planned layoffs by Facebook’s parent company

Instead of searching for a new job, Alexandrova decided to launch her very own start-up, Mave.

“My biggest dream was to start a business and my other passion is travelling,” she said.

“There have been big problems in [travel planning] that I have been experiencing. They are very frustrating. … The travel and planning trips and everything is so flawed. Digging through websites isn’t something you should be spending hours planning a [trip] that you just want to enjoy. I wanted to create a platform that knows me and understands my preferences.”

Alexandrova said she has 11 people working on the app and has over 16,000 people on the waitlist for its launch, something she said she wouldn’t have imagined four months ago.

“In my situation, I got to pursue a dream and I jumped in and closed my eyes and I am taking this risk and I already feel like it’s been so rewarding. It’s exactly what I should be doing,” she said.”

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— with Files from Craig Lord.

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