Tech Sector Layoffs 'Rival Worst Spikes' Over Time

Analysts are warning investors about their growing worries around the recent surge in tech layoffs.

RBC Capital Markets published a note on Monday discussing its analysts' views on the state of the labor market. While tech layoffs have remained below historical highs across industries, the surge of technology sector layoffs has given some analysts pause.

“What caught our attention was the spike in layoffs for technology companies which wasn’t as bad as those seen in late 2022 and early 2023, but otherwise rivals some of the worst spikes this industry has seen over time,” RBC's analysts wrote.

RBC analysts have noticed a number of trends, such as payroll numbers dropping below expectations in recent months. Those trends are an indication of normalization rather than failure, the analysts argue. The spike in tech layoffs, however, is seen by many as a red flag.. The decisions could have ripple effects outside of the tech sector and impact other shifts in the market.

“The overall level of layoffs moved up in August, but remained well below the spikes associated with past recessions, and was even a bit below the moves seen in 2023-2024 and 2015,” the analysts said. This may be connected to overall uncertainty in the market due to election and policy changes in the marketplace, they allege.

Related:Recent Tech Layoffs: 2024 Q1 Tracker

Tech Layoffs in 2024

Tech layoffs have been a consistent trend in 2024. More than 212,000 people have been impacted by layoffs in 2024 as of Sept. 9, according to the Trueup Tech Layoff Tracker.

Some of the biggest tech layoffs so far have come from major vendors that play in the channel. Intel laid off an estimated 15,000 workers in August, while Dell cut more than 12,500 jobs that same month. Microsoft laid off nearly 1,500 in June.

Smaller companies in the channel have also followed this trend. Five9 cut 180 jobs in late August, a decision it hopes will save money and help them optimize.