Tech Layoffs Are Hurting Workers Far Beyond Silicon Valley
Across Silicon Valley, tech companies are slashing their workforces in a bid to cut costs in anticipation of a global economic downturn.
Social media giant Meta announced earlier this month it was laying off 11,000 of its workers, or 13% of its staff. Since Elon Musk took over in October, Twitter has dismissed approximately 3,000 employees, or about half of its workforce. Meanwhile, Amazon is preparing to cut 10,000 jobs, according to reports. And Microsoft, Lyft and Stripe have also recently announced smaller cuts.
But it’s not only coders on six-figure salaries and free lunches in sunny California being impacted. In a signal of just how globalized the tech economy has become, tech employees earning just dollars per day in parts of the developing world are also losing their jobs, as outsourcing companies who relied on Silicon Valley clients begin slashing their workforces to stay afloat. Most of those people earn a fraction of their U.S.-based counterparts, and some fear the tech industry’s slowdown could push them below the poverty line.
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Over the weekend, tech-focused newsletter Platformer reported that Twitter had cut 4,400 of its 5,500-strong contractor workforce, including content moderators, many of whom are employed by third parties in the Philippines.
Among the other workers affected by recent industry cuts are hundreds of employees at CloudFactory, an outsourcing company with offices in Kenya and Nepal that, according to its website on Nov. 14, counted Microsoft as one of its 600 clients. The company told staff it was cutting around 12% of its workforce on Nov. 9, according to internal communications, seen by TIME, that have not previously been reported.
“The changing economy is affecting many tech companies including our clients,” CloudFactory’s CEO, Mark Sears, wrote in a message to all staff reviewed by TIME. “Revenue is well below our target, we are losing money, and we need to make significant cost reductions to preserve cash and improve our operating efficiency… I was too optimistic about our client’s [sic] willingness to continue spending on our services even with the economy declining.”
The memo said departing employees would be offered severance pay, but did not specify how much.
On Nov. 15, CloudFactory’s website said it employed more than 7,000 workers in Kenya and Nepal. CloudFactory declined a request to comment for this story on Nov. 14, but said that Microsoft was not one of its clients. The following day, Microsoft’s logo was no longer displayed on the client list on CloudFactory’s website. (Microsoft did not immediately respond to a request for comment.)
One employee in Kenya, who spoke to TIME on condition of anonymity out of concern for future job prospects, said their job, which paid less than $50 a day, had been affected.
“Right now in Kenya it’s hard to get jobs … I can see a lot of people plunging into depression, because the situation is really bad in Kenya right now,” the worker told TIME. “I am one of those people.”
In Nepal, where labor laws provide fewer protections for workers, affected CloudFactory staff were dismissed almost immediately, according to two people with knowledge of the matter. In Kenya, where there are better protections for workers, affected staff were asked to submit an “expression of interest” if they wanted to remain employed at the company, and await a decision scheduled for Nov. 17.
“I’ll still have bills to pay, I have rent, I need food. It’s going to be really hard,” the affected Kenyan employee said. “Some of my colleagues have loans from banks. How are they supposed to service them without jobs?”
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The layoffs at CloudFactory reflect the fast growth of the online outsourcing industry—known as cloudwork—in which tech companies allocate menial but important tasks to workers in countries with high unemployment levels, low wages and often lax labor protection rules.
“The tech world goes way beyond Silicon Valley and its directly-hired workers,” says Jonas Valente, a researcher at the Oxford Internet Institute’s Fairwork project. “There is a planetary workforce doing all sorts of jobs for tech firms. Full- or part-time workers in outsourcing companies, especially in Global South countries, usually have lower working conditions and worse contracts than those in big tech firms.” Valente adds that in countries with less protective labor laws, workers often have little bargaining power and can end up being easier targets for dismissal decisions.
CloudFactory’s mission, according to its most recent company accounts, is “to connect 1 million talented people to meaningful, online work.” The affected Kenyan employee had been attracted to work at CloudFactory, in part, by the company’s focus on ethics and social values, but believes the company has gone against those when executing this week’s layoffs with little warning. “We used to feel like a family,” the person said. “All this does not conform to the culture and principles that CloudFactory purports to have.”
The recent layoffs suggest that CloudFactory’s goal of connecting a million people to dignified digital work is now further away than ever. “It reveals the precarity of these jobs, but also the precarity of the story that was being told, that these companies were providing sustainable work,” says Phil Jones, a senior researcher at Autonomy, a think-tank focused on the future of work. “When in fact, much of that work is highly volatile and can shift in tandem with the fortunes of these companies.”
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