Layoffs – A Business Necessity Or An Avoidable Pain?

The tech industry has seen a string of layoffs in the face of uncertain economic conditions. In view of global competition and technological advancement, many companies have started to lay off people as an easy option to deal with the problems they face. The technology industry in the United States (US) is shrinking. According to, more than a quarter million professionals have lost their jobs since the beginning of 2022, with 1,67,000 job losses occurring in 2023 till date – going by the current trend, the job losses in 2023 will outstrip previous year much before end of Q2/2023.

The layoff scenario today

Over-hiring during periods of rapid growth is one of the main reasons for the increase in layoffs. Companies that shed people lose the time invested in training them as well as their networks of relationships and knowledge about how to get work done. Though short-term productivity increases as fewer people do more jobs, the quality and safety of work suffer.

Can Layoffs be avoided?

Quote on tech industry

However, research shows that these short-term cost cuts rarely benefit the companies and hinder long-term strategic change. The organizational environment is overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation.The findings of two decades of profitability studies are equivocal: The majority of firms that conduct layoffs do not see improved profitability, whether measured by return on assets, return on equity, or return on sales. 

Apart from layoffs, companies are also facing issues of no-shows and even short-term job hopping. With the volatility of the market, these trends are on the rise and proving to be costly for companies in the long run. The market has seen a rise in opportunities but also seen the tendency of resources accepting multiple offers and creating a vacuum in the actual output.

These problems of layoffs, no-shows, job hopping etc. need to be addressed very categorically to ensure that they don’t create lower margins and reduce team morale. Time and capital invested in the recruitment process tends to get affected if these problems are not nipped at the bud. The downward spiralling effect on the productivity and growth of the employees in the company reflects on the overall output of the company.

Companies are coming up with new strategies to deal with the situation in a better way rather than reducing their work forces. They are searching for alternatives to deal with the needs of their current business scenario like retraining their people, restructuring the organizational approach, stringent performance metrics, cuts in salaries, delaying appraisals – all these help but the problem more often than not resurfaces and thus there is a need to find a sustainable solution that will last. This sustainable solution that will last is that companies start to collaborate for talent.

Quote on layoffsTraditionally, companies have competed to on board the best talent in their businesses and for this, they have hired from a company next-door via a third-party that is either a recruiter, an online job-portal or direct job applications. This has worked for us all as it has been the easiest approach to add new talent to our workforce. Just like layoffs, which too is the easiest approach to cutting cost and achieving profitability, hiring through traditional means have been seen as the easiest way to shore up talent. There are obvious pitfalls in this –we disrupt each other’s businesses, we increase our cost base (not just that the new employee joins at a higher salary than the one who left us but also, we pay a fee to the recruitment agency et al) and if the position is getting filled due to attrition, then, we lose out on the learning curve of the new employee, a cost that stays hidden in plain sight albeit having a huge impact on our business. All these problems can be sidestepped, if instead of competing, we start to collaborate for talent. Collaboration for talent will benefit all the stakeholders – companies and employees alike.

Way forward- Benefits of collaboration:

Thankfully, the trend to collaborate for talent is picking up.

Companies are coming around to collaborate for talent – the benefits of doing so are significant:

  • Collaboration for talent is empowering companies to generate new silent revenue streams as well as save costs whilst improving employee utilisation levels.
  • It also reduces their costs and the dependence on expensive third parties for talent acquisition.
  • Collaboration among companies for talent has potential impact on addressing employee aspirations of growth, job satisfaction and job security. This is so, because companies are sharing their gains from collaboration with their employees and things like “Utilization Bonus” are being introduced.
  • Anxiety associated with “sitting-on-the-bench” is getting to be a thing of the past.
  • Employee engagement and job satisfaction levels have gone up – all leading to employee loyalty and lesser attrition rates.

Layoffs data from StatistaOf course, collaboration for talent is a new concept and has some associated risks and platforms such as Skill Beyond Boundaries (SBB) help address these risks to enable such collaborations for talent to take place smoothly.

One of the biggest questions organizations face as they grapple with a constantly shifting economic landscape is whether their current workforce can help them make the transitions necessary for their success. While companies tend to prioritize short-term financial results over the long-term well-being of their employees, employees are the lifeblood that enables a company to keep delivering the products and services that ultimately generate shareholder benefits.

Like they say, “Great Leaders communicate Growth, Recognition and Trust”, likewise true leaders need to explore alternate options as that is the way forward to bring a healthy conducive work environment.



Shilpi Varghese


Shilpi Roy Varghese

Relationship Associate

Skill Beyond Boundaries

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