Tech layoffs have dominated headlines in recent weeks and it may not be a matter of if, but when, they more fully hit Philadelphia.
To a degree, they already have. Beginning back in July and continuing into the fall, delivery unicorn Gopuff has been cutting its workforce. In that timeframe, it slashed 10% of its headcount, or 1,500 workers.
Those layoffs came ahead of major Silicon Valley measures, including at Facebook parent company Meta and Twitter. The companies collectively laid off thousands of their workforce in the past week alone. Ride share platform Lyft, software firm Salesforce and real estate firm Redfin were some of the other tech companies to follow suit this week.
"The last few months have been up-ticking big. We’re spiking right now," said David Pinette, a vice president at outplacement services firm Challenger, Gray & Christmas' Philadelphia office. "There was all of this funding, but the last three to four months the pendulum is swinging the other way."
After going on a tear in 2021, venture capital funding plummeted in 2022. Companies in the Philadelphia region made 89 deals in the third quarter totaling $619.6 million, according to the latest PitchBook-NVCA Venture Monitor report. That was the smallest deal count and lowest venture capital total raised since the fourth quarter of 2020, when Greater Philadelphia companies raised $460 million across 87 deals.
With funding drying up, jobs in the industry are starting to, as well. Nationwide, there were 9,600 tech job cuts in October and more than 28,000 nationwide in the first 10 months of the year, according to Challenger, Gray & Christmas. That's a 162% increase over the year prior.
Gopuff isn't the only local firm undertaking cuts, though it is getting most of the attention. Following disappointing third quarter earnings, Blue Bell-based Unisys said Tuesday it would be taking workforce action to reduce costs.
Pinette said other smaller companies — those with somewhere between 50 and 300 employees — have also made cuts over the past six months. In some cases, that has meant cutting anywhere between 30% and 50% of their headcount. Life sciences firms, which had been booming, aren't exempt either, said Pinette, adding that he's noticed biotech firms taking the brunt of the impact.
"They have to make dramatic cuts because the funding got cut off," Pinette said. "Running a small company is like managing your own personal finances. You have to make adjustments very fast just to make sure that there’s food on the table."
Pennsylvania has had the fourth most total layoffs of any state in the country at nearly 14,000 through October 2022, according to data from Challenger, Gray & Christmas. It's a long way from California's nearly 62,000 layoffs and also trails New York (25,799) and Michigan (16,375).
Pinette, who has been in the local outplacement industry for 16 years, said that bigger companies are better able to weather the storm when widespread layoffs happen. But just because they weather the storm, doesn't mean it won't hit.
"It’s going to catch up to every business — no one’s hiding from this," Pinette said.
It is possible that workers laid off from large tech offices in New York, for example, could filter down to Philadelphia, Pinette said. However, he emphasized that many of the laid-off tech employee he's spoken to and worked with now have an appetite for remote work and it's more likely that they will opt for jobs in which they can continue doing so.
