, Business: The global tech sector loses $7.4 trillion in a year -

Business: The global tech sector loses $7.4 trillion in a year

The global IT sector peaked during the COVID-19 epidemic and has since lost $7.4 trillion.

In 2021, the Nasdaq Composite had just reached its pinnacle, having increased by double since the pandemic’s beginning. The analysis showed that the tech industry was hiring like crazy and rewarding staff with high-value stock options.

It claimed that the environment had changed and that none of the top 15 American IT companies will produce profits in 2021.

Microsoft’s market worth has decreased by nearly $700 billion, while Meta’s market cap has decreased by more than 70% from its peak and lost more than $600 billion in value this year.

According to the report, investors have lost about $7.4 trillion so far as a result of access to cheap capital being restricted by interest rate hikes and companies’ future profit projections becoming significantly less valuable due to rising inflation.

Companies have responded by reducing expenses, stopping new hires, and terminating employees. According to Layoffs, 861 tech companies have already fired 138,112 workers in 2022.

These layoffs have been highlighted by tech companies like Meta, Twitter, and Amazon. The Chief Executive Officer of Meta, Mark Zuckerberg, stated when the company made the decision to let off over 11,000 employees, “At the outset of Covid, the world swiftly shifted online and the explosion of e-commerce led to outsized revenue growth.

“Many individuals believed that this acceleration would be permanent and carry on long after the pandemic was over. I decided to dramatically boost our investments because I felt the same way. Sadly, things didn’t turn out the way I had hoped.

The macroeconomic downturn, increased competition, and the loss of ads signal have led to the firm’s revenue to be much lower than he had anticipated, he noted, noting that not only has online commerce returned to prior trends.

The reality of global technology has not been insulated from Africa. Funding for start-ups has been cut due to decreased funding, high global inflation, and the ongoing war between Russia and Ukraine distorting economic responses. As a result, this year, numerous start-ups, including Kuda, Quidax, Swvl, Wave, and others, have announced layoffs.

“These are reasons that are affecting the transfer of money away,” said Adedeji Olowe, the founder of Lendsqr and a trustee of Open Banking Nigeria. The financial shortage cycle will not continue indefinitely.

“Toward the end of the year, it is likely to get worse, but by the next year, it will start to improve. Startups without strong foundations are at risk between now and the time when things start to get better. Many of these things are already taking place in the US. When start-ups are having trouble and having to lay off employees, it reflects what could happen here as well.

He added that start-ups here are likely going to start laying off staff in an effort to cut costs because when they raise money here, they also raise overheads, and this is not sustainable without VC funds.

Tech investments into Nigerian start-ups decreased 25% year over year from $1.45 billion as of October 31, 2021 to $1.16 billion in the same period of 2022, according to “Africa: The Big Deal.”

Credit: The punch

Leave a Reply

Your email address will not be published. Required fields are marked *