Here's what experts say could be causing tech layoffs, how it could impact Bay Area economy

Zach Fuentes Image
Tuesday, October 4, 2022
EMBED <>More Videos

Some experts say companies are preparing for the worst as tech employers are looking to trim or cut some of their workforce.

SANTA CLARA, Calif. (KGO) -- Tech companies of all sizes are looking to trim or cut some of their workforce. Some experts say the companies are preparing for the worst.

It's been a rough few weeks for many tech workers, outlets like Axios reporting companies such as Twilio and DocuSign are set to cut around 10 percent of their workforce, Meta says it's going to be reducing its staff over time by not filling open positions.

"I've seen it, I have seen the impact on people," said Ahmed Banafa, San Jose State Professor of engineering and tech expert, "I learned my lesson, which is always have Plan B."

Banafa who was laid off in the early 2000s as part of the Dot-Com bust says the layoffs we're seeing now, are tech companies preparing for the worst.

"They are seeing the writing on the wall," he said, "People talk about recession coming, people talking about the market, inflation is high interest rate are high."

RELATED: These Bay Area companies are announcing layoffs, but it's not all bad, researcher says

Nolan Higdon, professor of history and communication from CSU East Bay also says higher interest rates could very well be a factor and adds that weary investors are another one.

"For a long time, big tech had made a lot of promises about how we're going to transform and control the economy," Higdon said, "Sometimes those were successful, but sometimes they were also abysmal failures. You think back to like Elizabeth Holmes case, for example."

The Silicon Valley Central Valley Chamber of Commerce has been keeping track of the layoffs and the impacts that could be had on the Bay Area economy.

"If we're losing some of those high paying jobs, that starts to have a downward spiral effect," said the Chamber's President and CEO Christian D. Malesic, "It has to be something we get a grip on very quickly so that we stop, or it spirals very quickly downward like for example, Detroit, Michigan."

Malesic says Silicon Valley has to work even harder to attract and retain both employers and employees, more of whom want to work from home regardless of how impressive the work site may be.

RELATED: Gap slashes 500 corporate jobs in SF, NY as it looks to reduce expenses

"For those that are fans of the work from home environment, why pay $2,500 or $3,000, or $5,000 a month for a little teeny shoebox of an apartment, when you can live in a mansion in Kansas or Montana?," Malseic said, "We have to have a case that's attractive and right now the case that we have is unattractive."

Malesic says it's going to be, in large part, up to local leaders to make that case for Silicon Valley, but right now he says he's hopeful.

"We already have the base of the high tech, so it takes a lot for them to leave. Right now, they're rescaling and regrouping I think of these as either birth pangs or maybe you want to think of them as, aftershocks from the pandemic," Malseic said, "I'm a believer that we're going to get it all back in shape and we're going to be going in the right direction and that's up."

If you're on the ABC7 News app, click here to watch live