This has been a tumultuous year for the tech industry — or at least, it feels that way given the dozens of recent layoff announcements from companies both large and small. HubSpot, Akamai and iRobot are just a few of the 35 companies headquartered in Greater Boston that have laid off workers in 2023 so far.
According to layoffs.fyi, a website that tracks layoffs in the tech industry, U.S. tech companies have shed more workers in the first four months of this year than they did in all of 2022.
Layoffs can be a devastating experience for workers. They often come with financial hardships and anxieties about the future. For some foreign-born workers, there's the added uncertainty of how layoffs might affect their immigration status.
But when it comes to the toll these layoffs are taking on the state's overall innovation economy, there's been little impact, said Sara Fraim, who leads the trade group Mass Technology Leadership Council.
"You're getting drips and drabs of different pieces of news, and it's not really telling the whole story," she said. "[Tech companies] are still hiring. They're hiring like crazy."
An important part of the story, according to Fraim, is that tech is still in the throes of a severe labor shortage. In March, there were 25,888 unique job postings in the state's tech industry, according to the labor market data firm Lightcast. Tech companies employ around 9% of the state's workforce.
Fraim said the layoffs at many bigger firms signal a shift in strategy rather than a panic about the companies' futures.
"A lot of those companies are still hiring for hundreds of roles that are just different," she said, from the roles they are shedding through layoffs.
More companies are tightening spending compared to the last couple of years. With higher interest rates, borrowing has become more expensive. That's especially troubling for startups. Many of them depend on the ability to borrow funds from investors and banks for survival.
"We've been in an environment where it's been challenging to raise money and that's going to certainly lead to some difficult situations and conversations for folks as the year progresses," said Ari Fine Glantz, executive director of New England Venture Capital Association, a regional industry group for investors.
If startups can't raise the cash they need, they're more likely to lay off workers or at the very least, postpone additional hiring. Some of them simply won't make it.
Glantz said the next year is likely to be challenging for cash-strapped startups. But, he added, what's happening right now was, in many ways, predictable.
"We were always going to come back to a bit of a correction because the last two and a half years were artificially frothy," Glantz said. In 2021 and 2022, startups in Boston and surrounding major New England cities raised a combined $55.4 billion in venture capital funding, which shattered previous fundraising records, according to TechCrunch.
Daniel Acheampong, a general partner at Visible Hands — a venture capital firm that primarily focuses on entrepreneurs from underrepresented groups — said this is a tough time to start a new business or grow a startup.
The correction happening across the tech sector will deflate estimates of how much some companies' are worth. Acheampong expects investors will be more careful with their money, and entrepreneurs will have to work harder to demonstrate their ideas have a lucrative path forward.
"There's still money available to push innovation," he said. "[But] the timing that it's taking to make deals have slowed."
Neither Acheampong nor Glantz said they're worried that leaner — or fewer — startups could mean less innovation in Massachusetts.
"Some of the most exciting companies of the past 20 to 25 years have been formed in the most challenging times," Glantz said.
This segment aired on May 22, 2023.