The next big tech bubble is in full swing and it’s about to start forming fast.
A number of tech companies have announced that they plan to cut back on their workforce by up to 25% in order to get ready for the next wave of jobs, according to a Bloomberg Businessweek article published on Thursday.
“They’re all taking the same steps: cutting back on people, slashing staff, slashing investments,” said Mark Zandi, chief economist at Moody’s Analytics.
The move by some tech companies could be one reason why the Dow Jones Industrial Average has dropped more than 300 points in the past week.
The Dow dropped over 2,000 points earlier in the week.
It is now down nearly 8,000 from its previous peak of 6,200.
A couple of the biggest tech companies in the US have also announced that their workforce will be reduced in order for them to take advantage of the new wave of job opportunities.
LinkedIn is cutting jobs in its workforce by 25%, Google is cutting its workforce in half and Amazon is cutting 1,000 jobs.
The cuts are expected to take place by April 1, 2018.
“This will have a direct effect on hiring,” said Jefferies Group’s Brian Johnson.
He added that “these changes will have an impact on the bottom line and the impact on employee morale.”
The news has sparked a debate in the tech industry about the best way to make up for lost jobs.
Some believe that it is a better way to reduce the pressure on a company’s employees to meet quotas to keep up with growing demand.
Others, such as the CEOs of Amazon and Google, argue that it will boost morale and boost profits.
Both companies have also started laying off staff, although Google has been slow to do so.
The number of workers in Silicon Valley has grown by an estimated 12% since 2015.
As of the end of April, it was expected that the region had about 6.7 million workers.
It now has around 5.7M, according the Brookings Institution.
The area also has the second largest concentration of tech workers in the country after New York City, according census data.
Some analysts believe that the cuts could affect the number of jobs in the region as well.
“If the region’s job growth slows, the impact could be very real,” said Zandi.
Some of the most successful companies in Silicon Beach are looking for ways to cut costs and reduce the number and size of their workforce.
Some companies have been hiring for as long as 20 years, so cutting back is not a big deal for them, said Johnson.
“I think the more drastic this is the more impactful it is for the region,” he added.
Zandi said that some companies may also look to use the cuts to reduce costs.
“Companies will look to cut cost as a strategy to reduce labor costs,” he said.
Zane said that there could be an effect on the overall economy as well because some companies are reducing investments in their own facilities.
The region also has a lot of smaller companies like Lyft, Uber and other ride-hailing companies, which could have an effect in the future.
“These are all companies that have been successful for a long time,” Zandi explained.
“It is very difficult to predict what they are going to do when it comes to capital expenditures in the next few years.”
Johnson said that he does not believe that layoffs will be the only reason for the economy to slow.
“There is still a lot to do,” he stated.
“We still have lots of work to do to bring down unemployment.”