The great rebalancing act: Why tech is focused on profitability rather than growth, and why this is good for the industry 7
CORRECTING COURSE FROM PANDEMIC-ERA OVERHIRING
As is customary during most slowdowns, headcount reductions have been the main cost-saving lever
tech companies have pulled. This is unfortunate, but also predictable as it tends to be the easiest to
execute; rearranging elements of operational strategy can be complex, time-consuming, and slow to pay
off. Since the beginning of 2022, over 350,000 jobs (and counting) have been lost in the tech sector, with
more than 50% of those layoffs occurring thus far in 2023.1
Our study found that 72% of tech companies have executed some form of headcount reduction in the last
12 months, with more than one-third (34%) cutting more than 5% of their staff (see Figure 6).
Have you undergone a headcount reduction in the past 12 months? If so, what was the scale of the reduction?
Are there any other actions you have taken or expect to take to improve profitability? N=146
FIGURE 6: ACTIONS TAKEN TO IMPROVE PROFITABILITY
Profitability levers
Other actions to improve profitability
Headcount reduction
(% of staff)
Reorg. organizational
structure to
improve efficiency
Adjust pricing
Transform operating
or service model
Vendor
consolidation
Offshoring/
outsourcing
Carve out/wind
down unprofitable
business segments
Automate processes
3% 10% 21% 38% 28%
>20% 11-20% 6-10%
58%
54%
49%
35%
33%
33%
31%
1-5% 0% (no action was taken)
72% of tech companies have executed some form
of headcount reduction in the last 12 months
1. Source: Layoffs.fyi, AlixPartners Analysis