An interview Digital business transformation expert and former COBOL programmer Kamales Lardy has spent a lot of time in the technology industry, including consulting with large corporates and SMEs going through downsizing processes.
But mass layoffs are hitting midcareer tech professionals and hurting the businesses that produce them, he said. Register Alluding to the current trend of mass layoffs in an interview last week is a logical misstep.
“I would have expected more from the tech industry, which should be one of the most innovative relatively speaking. I feel like these tech companies are taking steps backwards, specifically dismantling the departments and structures they built for future growth. “.
[Mass redundancies are] an outdated and traditional practice that many companies turn to as the first means of generating liquidity
Lardy says most of the people affected by the layoffs have “about 10-11 years’ experience” and are therefore “not really junior staff who are easily replaced”, noting that “there could be a loss of skills and knowledge in those companies”. :
He also worries about losses in the technical and software engineering layers, where diversity is already a critical issue, as executives look to build and develop technology using AI systems known for their biases that were trained on limited data.
Over the years, Lardy has worked across industries and regions and has found that more than 70 percent of digital transformation initiatives either fail or fail to achieve the intended results. One of the “often overlooked” elements that make or break digital transformation is the “people” element.
Copycat tech
“In my opinion, companies seem to be copying each other,” says Lardy, who sees them taking the opportunity to shed some of the “redundancy” they’ve picked up because of the hiring epidemic, when many believed that: the future was a long, endless corridor of Zoom sessions, and peripheral manufacturers were making money hand over fist.
Today, however, many of the companies that saw unprecedented revenue growth during the global lockdowns have begun massive job cuts. Layoffs.fyi compiled data showing that 693 tech companies laid off 197,945 employees this year, which isn’t even halfway through, compared to 164,591 laid off by 1,056 companies in all of 2022.
Lardy quoted Henry Ford’s aphorism: “Thinking is the hardest job, which is probably why so few do it,” saying mass layoffs were “an outdated and traditional practice that many companies turn to as the first means of creating liquidity. “.
Shareholders, profits and the bottom line
Summarizing Gartner, Lardy said: “The job cuts don’t really affect profitability and the impact isn’t visible in the short term because of the increased costs and high churn (3-6 months) that usually has to be paid.
“I feel like these tech companies are taking steps backwards, specifically dismantling the departments and structures they’ve built for future growth.
“Also, this is rather short-term thinking than focusing on sustainable strategies for the digital future.”
Lardin, who recently wrote a book titled The human side of digital business transformationnotes that while companies are laying off people, they’re investing billions in AI and automation, citing Microsoft’s $1 billion+ sunk into OpenAI so far.
Earlier this year, Microsoft announced plans to cut 10,000 jobs (4 percent of the company’s workforce) following Satya Nadella’s comments about the need to boost productivity. It was not the only one, of course. Salesforce, Amazon, Google, Meta and others are also cutting redundant staff hired during a surge fueled by the COVID-19 lockdown.
During the company’s latest earnings call last month, Nadella noted: “During the pandemic, it was all about new workloads and increased workloads. But before the pandemic, there was a balance between optimization and new workloads. So what we see now. Are new workloads starting in addition to the high-intensity optimization push we’ve had?”
CFO Amy Hood was quick to respond to that later, saying that the company had “almost a year where the pivot that Satya was talking about, [here] we’re starting tons of new workloads, and we’ll call it during the pandemic, this transition post, and we’re really coming up on the anniversary of that launch.
“And so we continue to define optimization to speak to your point of view. But at some point, the workload just can’t be optimized any further.”
Without specifically singling out Microsoft, but talking about the moves made by tech companies in the “maturity phase,” Lardy said investors are now “evaluating them based on different KPIs, like revenue per employee.” He said that “job cuts have a big impact on this KPI, even though these companies may have large reserves,” making them “a quick way to protect the rights of investors and share prices.”
But is it sustainable?
We asked Lardy about the unprecedented cuts Twitter made when Elon Musk came on board.
He said. “I find it hard to believe that 30 percent of the organization was running the entire structure, and even then, it will take time to evaluate the structure, change roles and responsibilities, and become more effective at implementing the transformation. In a few weeks the workforce is in turmoil and I believe we will see an upper crust with a new CEO.
“Based on what I’ve seen him post online, I’m concerned about the values and direction that tech leaders like him are promoting.”
On the other hand, those whose skills have been lost to the tech industry now have options to build financial independence and may not return to traditional corporate roles. Still others find work as contractors, where technically skilled people balance more than one full-time job made possible by telecommuting.
After all, the tech industry “isn’t really in dire straits financially,” he says. While it “may have some revenue loss [it is] not yet in the red. Layoffs should be a last resort in really bad financial situations, not a first resort in somewhat uncertain circumstances.”
Among other solutions, he says, companies should push back on what they see themselves doing and instead “appeal to the people element” and leverage investors and others to focus on the longer term rather than the short term. : the term And that means building an “ecosystem of stakeholders (internal and external)”. ®