If you thought 2025 was bad for tech employment, brace yourself. Industry analysts are warning that the layoffs that gutted engineering teams last year were just the opening act.
The latest wave hitting Silicon Valley isn't about pandemic hiring excesses anymore. It's about a fundamental reset in how tech companies operate, and the numbers suggest we're only halfway through.
Here's what's driving the next round: AI is starting to actually do what everyone said it would do. Code generation tools are making individual developers more productive, which means companies need fewer of them. Customer service AI is replacing support teams. Marketing automation is eliminating junior positions. The efficiency gains are real, and they're showing up in headcount.
Google, Microsoft, and Amazon have all signaled that their current workforce levels are "still too high" despite multiple rounds of cuts. Meta is continuing what Mark Zuckerberg calls the "year of efficiency," which is a polite way of saying more people are getting cut.
Mid-sized companies are worse. Startups that raised money in 2021 at inflated valuations are hitting the wall. They're running out of runway, can't raise new funding at previous valuations, and are making brutal cuts to extend their burn rate. Entire teams are disappearing overnight.
What makes this different is where the cuts are happening. Previous rounds targeted recruiters, HR, and duplicate roles from acquisitions. This wave is hitting engineers, product managers, and designers - the core functions that tech companies exist to employ.
The Bay Area housing market is starting to reflect it. Rental vacancies are up. Home prices in Palo Alto and Mountain View are softening. Tech workers who weathered the first rounds are quietly updating their LinkedIn profiles.
