The once-booming tech sector here has been hit hard by lay-offs in recent months, with some of the biggest names in the business axing jobs left, right and centre. (straitstimes.com)

Earlier in October, consumer electronics giants Dyson and Samsung laid off an undisclosed number of workers in Singapore on the same day.

In July, fintech company MoneyHero laid off 80 staff as a cost-cutting measure. In the same month, logistics technology company Ninja Van sacked 5 per cent of its workforce in Singapore, before suspending operations of a subsidiary firm in Vietnam as it seeks to resolve issues over owed salaries and employee social insurance contributions.

The Straits Times explains why the lay-offs happened and what tech workers can do about it.

Why are more tech lay-offs happening?

Restructuring, rising employment cost and slow growth forecast are contributing factors leading to job cuts.

UOB senior economist Alvin Liew said the “earlier rounds of retrenchments” may have been caused by a combination of economic uncertainty, rising interest rates and cases of over hiring during the pandemic.

“But the underlying factors most likely have evolved due to the rise of the application of artificial intelligence (AI),” he noted, adding that the retrenchments have not been limited to Singapore and have been taking place in key global tech centres since 2022.

Mr Faiz Modak, the associate director for tech and transformation at recruitment firm Robert Walters Singapore, said while many firms “hired aggressively” after the Covid-19 recovery phase, the global market witnessed a slowdown in 2023.

Companies want to focus on profitability and productivity, so they are “consolidating their workforce with a right-sizing approach”, he added.

What is happening to the tech landscape?

The landscape has changed, said CGS International economic adviser Song Seng Wun.

“Companies answerable to their board members… have to become a bit more ruthless in managing their costs, especially since the cost of money is no longer as free as it used to be.”

He was referring to the impact of inflation and climbing interest rates on companies, which used to borrow money at almost close to zero interest. In short, it is more expensive to borrow money now.

Additionally, he noted a very competitive landscape where brands are “catching up on quality” and are able to sell their products at cheaper prices.

So it all boils down to whether there is demand for these “modern services” and if customers are paying for them, Mr Song told ST.

He said when companies stop making money on a particular product, coupled with pressure from board members and shareholders, it makes a case for cutting certain divisions and finding something new. “So it’s very brutal in that sense.”

Shorter business cycles where consumers demand quick product replacements have posed challenges as well.

“It’s less about a recessionary condition unfolding, but more cases of consumers being faced with a lot of choices, so they can be more selective in what they are spending on,” Mr Song said.

What type of tech roles will bear the biggest impact?

UOB’s Mr Liew said jobs displaced by AI within tech companies could likely be in the traditional areas of communications, customer services, basic programming, basic data analysis and financial reporting.

Meanwhile, Mr Modak noted that most of the jobs impacted within the tech industry would be support functions or operational roles that can be offshored to lower-cost locations such as the Philippines, Vietnam and India.

“We have also witnessed some software engineering functions being impacted at tech start-ups as funding from venture capitals have been conservative. As a result, the start-ups are focusing on generating profits to encourage further rounds of investment,” he added.

Mr Modak also noted that the banking and finance sectors, which have been major players in hiring tech professionals, have slowed recruiting in Singapore and are looking at offshoring some roles to markets like India, Thailand and Dubai.

Should tech workers worry and what can they do?

While the rise of AI and machine learning continue to stir up job displacement concerns, Mr Modak pointed out that many industry players also believe they can help tech professionals perform their jobs better.

He encouraged job seekers to be aware of the latest technology and trends, and continue finding jobs in tech that allow them to upskill.

“They should always be eager and continue to learn. Early adopters (of technology) can find themselves in a strong and employable position in the market and will continue to be in demand.”

Mr Song also highlighted that while there are job losses, new jobs are being created: “Those who are doing well and holding up to the challenge are hiring.”

For instance, he noted that retrenched tech-savvy sales people working in a certain sector could very well be easily employed by another firm in another sector.

Are there newer types of in-demand tech roles?

Experts say there is ongoing demand for AI-related roles, including machine learning engineers and prompt engineers. Those in data engineering, cyber security and digital transformation fields will continue to be sought after.

Mr Modak said in-demand roles also include senior and skilled talents “responsible for driving topline revenue”, and those with experience working at a global company with knowledge on the latest technology stacks.

Are unemployment rates going up, and what’s the outlook for the tech labour market?

The latest purchasing managers’ index (PMI) from Singapore’s tech manufacturing industry suggests that the outlook over the next few months is “fairly positive”, said Mr Song.

PMI readings for electronics rose to 51.5 points in September, up from 51.3 in August. Readings above 50 reflect growth while those below represent contraction.

“While it is hard to say if the net hiring and retrenchments will result in an overall increase in headcount for tech companies, we are fairly certain that the median wages will be increasing,” said Mr Liew.

Mr Modak noted that hiring is “usually slow” during this time as companies are budgeting and planning for the new year. The volatile market situation globally, including the upcoming US elections and stock market trends, have made it hard to predict if there are more lay-offs coming or the extent of them, he added.

“Many firms are still adopting a conservative approach towards hiring for this year. However, with every downturn there is always a recovery, and we are optimistic that it’s a matter of time for the recovery trend to happen.”