The recent spree of job layoffs and salary slashes have swiftly ramped up the Nigerian tech industry in the last few months. This is no different from what is universally unfolding with the tech giants on the global scene. These layoffs and salary slashes are subtle but active responses of tech companies to the brooding recession, threatening their profits and business sustainability. The Nigerian tech space being an emerging player in the layoffs spree only solidifies the exodus of the favourable market, which created a major wealth pull for techpreneurs, tech experts, and the tech industry in general. Several reasons for these layoffs include ambitious hiring during the pandemic, a draggy engagement flow with the e-commerce activities, fewer online engagements due to in-person event resurgence, and other trackable factors.
Layoffs/Cut-offs: Corporate Reasons
According to Hilda Kragha, the CEO of African Talent Company, in an interview with Arise News Channel, the present state of the African tech industry is gregariously hitting rock bottom. She further explained that the global layoffs account for about a 46 per cent decline in Africa’s workforce, particularly those with remote jobs. She mentioned a Kenyan company that had to shut down due to the crash in the crypto industry. The Nigerian and African tech space is currently faced with inflation, increasing interest rates, declining investments, and vanishing startup funding.
It is factual to state that the pandemic played a key role in sporing many tech companies to an overdrive which encouraged them to expand to take advantage of the increased online presence aggressively. This action boosted their share prices with complimentary stock payouts for their staff. But the story is gradually fading in, as many federal reserves are on a progressive rise in interest rates to combat inflation. This also accounts for stingier investment commitments from venture capitalists and investors taking control of their investments’ directions amidst the brooding recession.
In response to this, the tech companies are re-strategising on how best to stay afloat – that is, they are now more concerned about the profitability and sustainability of the business than they are about expanding. In situations where expansion buries their profitability, they tend to shrink their workforce or reassess the payment scheme of their workforce. The minimum double-digit layoffs within established and startup tech companies like Twitter, Meta, Stripe, Salesforce, and Lyft are responsible for thousands of engineers, salespeople, and support staff layoffs. Stricter measures have been adopted for firms that did not join the layoff bandwagon, like Google and Amazon. For example, companies now suspend hiring and place staff on salary slashes, eventually leading to some staff leaving on their own.
Amazon was reported to be set to lay off about 10,000 employees, as 2022 accounts for over 120,000 layoffs of tech workers globally – the highest in history.
Nigerian Tech Space Vs Global Tech Space
Here, in Nigeria, startups like Nestcoin (an African web3-based startup) declared that they would be laying off employees after losing a chunk of their assets in the FTX market. For 54Gene and Kuda Bank, the layoff came as a rude shock as these organisations belong to the ‘big boys’ in the Nigeria startup space, so what could have gone wrong? Eden Life, Quidax, and GetEquity are Nigerian startups that did not consider laying off. Rather, what they adopted was a reduction in their staff’s salaries. These companies argue that the layoffs and cut-offs are due to the redundancy of roles, low performances, and override of contract staff as occasioned by COVID-19.
The statistics and percentages of Nigerian and African startup layoffs are pale compared to their diaspora counterparts. The figures include Kuda (23 employees), which amounts to less than 5FIVE per cent of its workforce, 54Gene (95 employees), Wave (300 employees), Vezeeta (50 employees), SWVL (400 employees), Marketforce (54 employees). Compared with US-based companies like Meta (11,000 employees), Redfin (850 employees), Opendoor (550 employees), Zendesk (350 employees), Twitter (3,000 employees), Amazon (10,000 employees), Snap (6,000 employees), Salesforce (2,100), Stripe (1,000 employees), Shopify (1,000 employees), LYFT (600 employees), Coinbase (58 employees). A visible fact is that Nigerian and African tech spaces are emerging industries, and it is not avoidable as such not to experience this as they have not been able to cushion themselves enough from recession.
Layoffs/Cut-offs: Challenges And Opportunities
Kuda bank is an example of a company whose layoffs are somewhat unnecessary. While aggressively expanding into other African countries and considering Asian countries as well. SWVL is another company valued at about $600 million still. It is quick to jump on the corporate clean-up spree. Operation cost needs to be maximally managed because companies like Meta are still determining what the future owes. But when we consider companies like Netflix with a valuation of $100.55 billion, Microsoft ($1.91 trillion), Stripe ($94.4 billion), and Shopify ($38.02 billion), all who account for about 41,000 layoff workers in the United States tech space, the Nigerian tech space seems safe.
But this safety is not good for a developing country like Nigeria, with mountains of socio-economic challenges. These layoffs and cut-offs for the Nigerian state are a big weep on the employment gap of skilled workforce who the terrorist groups can engage in championing their destructive schemes. These non-engagements of young tech workers can translate into a wider spectrum of internet fraud and tech-related crimes. On the other hand, there is a big possibility that the present layoffs will steer the emergence of many startups as the laid-off workers will want to kickstart their firms by putting to use all the skills and experiences they have acquired while working for these companies.
A global discussion that sits around the layoffs and cut-off is the futuristic decline of the FXT. This is capturable in the realities of the crypto market. The tech companies’ shares are next on the line, as typical of what Meta’s shares are presently experiencing due to her devotion to the VR space. Other tech space shares and funding will experience drops, and it is important that those who will want to stay afloat do the necessary now by cutting down on operational costs.
It is also true that the surge of the tech industry globally is primed between 2019 and 2020. This is particularly for Nigerian and African tech startups. The major motivator for some of these emergencies is the astronomic online presence. But the tides are rapidly changing as the world is fully re-entering the normal space, and the algorithm for online presence is dropping daily. Physical activities have resumed, and online-based companies are beginning to feel the weight of their declines. This is also telling on their numbers which is the bait they use in attracting potential investors.
And for well-paying tech roles, the layoffs and cut-offs will drive a huge change as many unplanned top-level tech experts may find it hard to secure new roles, which may drive them to take up lesser roles with lesser pay to meet their social demands. In terms of cut-offs, the top-level tech experts may find it uncomfortable to continue, which propels them to leave the job. For those still on the job, the layoffs and cut-offs signal an elevated level of corporate anxiety wherein they are unsure of their fate going forwards and as such. They tend to overwork themselves to be on the good book. This advertently will spike the number of work-related health challenges going forward. According to ZipRecruiter, there is a significant drop in job seekers’ confidence within the tech space.
What Nigerian Tech Space Should Do
In conclusion, the surging layoffs and cut-offs from tech companies globally are not necessarily a negative turn of events. Rather, it is a balancing mechanic for the slightly drifting tech industry’s ship in the face of a ranging recessional storm. The Nigerian tech space should not think itself immune to these realities. Instead, the Nigerian tech industry should begin to map out alternative ways of staying afloat in the coming recession.
