Silicon Valley braces for layoffs, pay cuts
“I think over the next month, you’ll hear a lot of unemployment picking up in the Bay Area, which has not happened since 2007. Even then it didn’t happen on a large scale. But now you’ll see that happening for the first time since the 2000 bubble.” — M Rangaswami, venture capitalist
Washington, April 14
The Silicon Valley, hub of the Indian entrepreneurship that showcases excellence of Indian IT professionals, is bracing for a post-Covid period with layoffs, pay cuts and hiring freeze, a top venture capitalist said.
M Rangaswami, a venture capitalist and entrepreneur, said while IT giants, such as Google and Facebook, might have a different approach, many startups were instituting either layoffs or reduction in salary or a combination of both.
“They are all making sure they have enough cash for 18 to 24 months. This is a bad time to raise money because if they try to do so, they’ll get poor valuation,” said Rangaswami, reflecting upon the mood among startups in the Silicon Valley.
“I think over the next month, you’ll hear a lot of unemployment picking up in the Bay Area, which has not happened since 2007. Even then it didn’t happen on a large scale. But now you’ll see that happening for the first time since the 2000 bubble,” he said.
He said it’d not be like half the Silicon Valley would get laid off. “It might impact five or 10 per cent of the workforce. People might take a 10 per cent salary cut. It’s not that the sky is falling, but the fact is that it hasn’t happened in a long time,” said Rangaswami.
Responding to a question, he said he could not talk for big companies. “They may not do anything. But startups will definitely lay off and cut salaries,” he said.
“Big companies will probably freeze hiring. They have a lot of cash and they can weather the storm. But small companies will have to do cost cutting for sure,” Rangaswami said.
He said Indian IT professionals on H-1B visas might not see much firing because they were already saving money for their businesses. — PTI
