Tech expert says layoffs at Microsoft and Amazon not surprising

The string of tech industry layoffs continued Wednesday as Microsoft announced plans to cut 5% of its workforce, laying off about 10,000 workers.

Along with other tech companies, Microsoft had a hiring boom during the pandemic. The software company expanded its workforce by 36%.

"It was only a matter of time. It's just that this a shakeout that is happening at this point of time," said Professor Saikat Chaudhuri, Director of the U.C. Berkeley Haas Business School's Management, Entrepreneurship, and Technology Program.

Professor Chaudhuri says what is happening in the tech sector has less to do with global economics and more to do with a correction after rapid growth.

"It was growing at rates which are unsustainable now. Think about all the people they've hired over the past few years. Some companies as much as 30% of their workforce have just joined," said Chaudhuri.

Along with Microsoft's 10,000 cuts, Amazon began notifying some 18,000 employees about cutbacks in the U.S., Canada, and Costa Rica Wednesday.

Twitter reportedly plans to lay off 50 more workers, according to the site Insider.

Chaudhuri says there are some differences for tech workers compared to the past dot-com bust.

"Software and deployment of other technologies like that are what are pervading every industry. So you are very much able to transfer those skills to other areas," said Chaudhuri, "Look at the unemployment numbers right now. We still have record low unemployment and so there are jobs to be had. We're just rebalancing a little bit now."

"I know a few people who've been affected, but overall I'm not too worried because tech will always be needed," said Jonathan Ng of Berkeley.

With the recent wave of layoffs, Chaudhuri says many tech workers are going online and turning to social networks.

"People are helping each other in their networks, and they're helping each other find matches at other companies," said Chaudhuri.

"The way I job search and the people that I know who job search, maybe look for connections on LinkedIn and talking to people there or going to conferences," said Adria Garriga Alonso, a Barcelona native who is working on AI research in Berkeley.

SEE ALSO: Amazon begins cutting 18,000 workers in its biggest layoffs ever

Professor Chaudhuri says there also are opportunities for startups to still get money because VC venture capital funding remains strong.

"Those who are most enterprising. They will actually see opportunities in new startups. Because if you think about it, there's still a lot of venture capital money that's still out there, and it has to go somewhere unless those funds want to return that money to original investors," said Chaudhuri, "You'll have to have a business model which is a little more conservative or safe, which allows you to show a path towards profitability a little bit sooner because they can't deal with uncertainty. That's the challenge."

Other people might decide to go back to school during this shift in the tech sector.

"You see more applications during the recessions because people just feel like well, I’m not missing out on much in the job market at the moment let me go and get the education that I always wanted to so when I come out I'll have new opportunities," said Chaudhuri.

The nation's historically low 3.5% unemployment rate could also benefit workers. Chaudhuri says jobs are still available despite the rebalancing of the tech sector.