Dark days for the ICT industry in Singapore
"This is a sad moment, and there's no way around that", concedes Mark Zuckerberg, the big boss of Meta. Barely 18 months after its creation, the group that includes Instagram, WhatsApp, Messenger and the pioneer Facebook launched the largest-ever social plan. Eleven thousand people around the world, representing 13% of its workforce, were laid off on November 9. Among them were workers in Singapore, the firm's Asia-Pacific headquarters.
In September, the Singaporean giant Sea Limited, owner of Garena, also announced staff cuts. Since June, the company has laid off 10% of its staff, that is about 7,000 people. We know Garena from the famous game League of Legends. But nothing is going well for the company, which, after having survived the pandemic, has seen its shares plunge by more than 72% this year. Garena is reportedly feeling the pinch from India's blockade. Earlier this year, the Indian government blocked some 50 China-related applications for the sake of national security. Unfortunately, Garena and its game "Garena's Free Fire: Illuminate", had half of its users in India: 40 million monthly active users in India out of 75 million worldwide.
And the bad news has kept pouring in for Singapore. StashAway, a Singaporean-based digital wealth management startup, has cut off 14 percent of its workforce. Currency exchange Crypto.com, also based in Singapore, has shed 5 percent of its staff. Within a day of each other, Stripe and Twitter also announced massive layoffs. The Singapore offices will once again be affected.
How layoffs in the Tech industry are affecting expats
For Singapore, it is a hard blow that has tough repercussions for locals and expatriates alike. Singapore has relied on ICT (Information and Communication Technologies) to become an innovation powerhouse. The country has developed into the hub of Southeast Asia and has one of the highest GDPs, with $73,000 per capita in the world (second only to Luxembourg). The city-state is the world's 4th largest financial center, as finance contributes to 15% of the country's GDP, while industry accounts for 26% (2021 figures). Major players did not come to Singapore by chance. They have found the ecosystem that fuels their development. According to the Economic Development Board, 46% of Asian regional headquarters are based in Singapore. Consequently, the country has been attracting international talent in large numbers, starting with Indian expatriates.
ICT crisis in other countries
What about other countries? The "Tech Winter", as some call it, spares no economic power. It is particularly harsh in the United States. According to trueup.io, a participatory website, 200,000 employees in the sector have been laid off since the beginning of the year. Tesla cut off 3,500 employees in June. Twitter, freshly acquired by Elon Musk, let go of 3,700 employees on November 9, then 4,400 contract workers a few days later. Shopify has already shed 10% of its staff worldwide. Netflix, Paypal, Coinbase, Uber, Snap are on the same dynamic.
Some countries are faring better than others. In France, for example, it is unlikely that there will be waves of layoffs by Zoom, as in the United States. The French labor code does not allow such a high degree of flexibility. This is French security for employees, who don't have to fear for their jobs. Nevertheless, French Tech, the ecosystem of French startups, is losing momentum. Growth forecasts are going downwards, and so is hiring.
On Tuesday, November 22, the HP group announced that it was parting ways with thousands of employees worldwide (about 10% of its workforce), with the objective of saving 1.4 billion dollars per year. “Startup nation” Israel is also in the red zone. In July, Asurion, an American insurance company, closed its Israeli development center. In the same month, AID Genomics, a Singaporean medical technology company, launched a massive restructuring program: Its Israeli R&D center was relocated abroad and investment plans in Israel were cancelled. About 400 people were laid off, most of them in Israel.
Reasons behind the Tech crisis
What are the reasons behind such a massive wave of layoffs around the world? And why the Tech, a particular sector that kept growing rapidly even during the Covid pandemic? Experts believe that 2022 is the year of a return to normalcy. Strong changes in consumer habits during the lockdowns (more home deliveries, streaming, games, etc.) are believed to have propelled startups. But with the return to so-called normal life, all these activities seem to have shrunk as well. The war in Ukraine and the inflation rounded off the black series. Tech giants that have massively hired during the Covid pandemic are now faced with the current crisis. They are revising their strategy to a minimum; unfortunately, local and international talents are the first to pay the high price.
Between January and March 2022, Netflix had already lost nearly 200,000 subscribers. That was the first time ever in more than 10 years. The company decided to lay off 150 employees, mainly in the United States. FinTech is also affected. The Swedish company Klarna announced cutting off about 10% of its workforce (500 employees). Klarna justifies its decision by saying that it has thought about growth prospects in "a world that is very different from the one we live in today". In the end, the ICT industry has already laid off more than 130,000 people worldwide in 2022.
However, there are no reasons to panic. According to experts, massive layoffs in the Tech sector are nothing to worry about. If jobs are destroyed in the short term, their evolution can only be assessed in the long run. They believe that the market will recover as quickly as it has slowed down. Others are more cautious and fear a "post-pandemic bubble" with potentially critical consequences for startups.
