Two months into 2020, an unwelcome trend has emerged in Boston’s technology circles: layoffs at some of the industry’s biggest companies. First, it was job cuts at Akamai Technologies and TripAdvisor. More recently, Wayfair and LogMeIn showed hundreds of employees the door.
Analysts say there’s no reason to hit the panic button ― thousands of other jobs remain open throughout the region ― but the recent rash of payroll cuts do serve as something of a gut check: The state’s long-running tech boom eventually must reach an expiration date, with companies pulling back on spending to preserve profits, or to trim losses.
“If the horizon has been totally clear the last year and a half or so, maybe you’ve got a couple of storm clouds that are starting to form," said Ben Z. Rose, a financial analyst who is president of Battle Road Research in Lexington. Rose said ongoing uncertainty over the coronavirus in China and a decreased appetite on Wall Street for pushing growth over profitability have many companies taking a hard look at their costs.
But he also emphasized that the Massachusetts firms that have carried out layoffs this year have their own unique characteristics that help explain their decisions.
LogMeIn, which this week said it had laid off 300 workers, including nearly 70 in Boston, was recently purchased by a private equity firm, a move that often brings restructuring, though the company says the decision to let workers go was unrelated to its new ownership. Wayfair ― which laid off 550 employees last week, 350 of them in Boston ― has been under pressure from investors to slow losses even as it plows resources into growing revenue. Needham-based TripAdvisor, which eliminated 200 positions in January, has been locked in a battle with Google to get more consumers using its online travel listings.
And Akamai, which cut more than 70 jobs last month, according to the Boston Business Journal, has periodically adjusted the size of its workforce over the last few years as the Cambridge company has sought to balance its slower-growing content delivery business with a promising cybersecurity trade.
Nationwide, technology companies have been shedding jobs of late. Research conducted by the outplacement firm Challenger, Gray & Christmas found that 13,869 US technology jobs were cut in January, up from 638 a year earlier. In Massachusetts, 2,323 jobs were eliminated across all sectors of the economy, up from 143 in January of 2019.
Andrew Challenger, vice president of the Chicago-based firm, said many of those job cuts have come from established technology employers such as those in Massachusetts that have resorted to layoffs. But he noted that lost jobs have largely been offset by younger firms that have grown up during this long economic expansion and continue to hire at a brisk pace.
There continues to be huge demand for tech workers in the region, according to research by the Boston job market analytics firm Burning Glass Technologies. The company reported that there were about 6,600 software engineering jobs open in the Boston area over the past 60 days, up 18 percent from the comparable period a year earlier.
It may sound contradictory — some tech workers being told to clean out their desks while thousands of positions remain unfilled — but Burning Glass CEO Matt Sigelman said it’s all part of a natural cycle.
“You can see growth and cuts happening simultaneously, and that sounds weird. Actually, a healthy job market needs liquidity,” he said. “The notion that some companies are scaling back and others are scaling up ― that’s actually the sign of a healthy economy.”
Another hopeful sign for the economy in the Boston area, Sigelman said, is that tech employment isn’t concentrated among a handful of firms. The biggest companies get most of the attention, he said, but the average employer hiring software engineers is looking for three people. That means there are potential landing spots for laid-off workers both at smaller startups and at firms in other sectors that are adding new technical capabilities.
And even as some big players in the industry retool, other companies in the region are expanding. For example, Toast, the Boston-based maker of technology for restaurants that now employs about 2,700 people, said last week that it took in $400 million in new investment to help it grow. Kronos, the huge Lowell-based firm making workforce management software, announced that it would add 3,000 employees to its global operations following a merger with a Florida-based rival.
In fact, the competition for talent in Boston remains one of the main constraints to companies that want to grow. Rose, of Battle Road Research, noted that ― in a counterintuitive way ― cost-cutting at publicly traded companies seeking to improve their stock price can actually help retain employees. Many are paid in stock options, he said, so when the company does well on Wall Street, it makes their compensation more valuable.
Still, tech is not an industry for those who seek stability; it’s common for people to move from one company to another after a relatively brief tenure. The constant churn of the workforce was on display this week at a job fair organized following the Wayfair layoffs. Argosight, a recruiting firm that focuses on high-ranking executives, expected a handful of people to show up. But the Wednesday evening event on Huntington Avenue attracted more than 1,000 job seekers, and 60 employers, all of whom were hiring tech talent. They included hot startups, rapidly growing firms, and tech behemoths such as Drift, DraftKings, and Amazon, along with companies in other sectors, such as BJ’s Wholesale Club.
Brent Kleiman, chief executive of Argosight, said that when “pillar companies” such as Wayfair lay off workers, it can create opportunities for companies that need to get bigger.
“Yes it shocks people. But it’s going to foster goodness, and if it doesn’t, there’s a bigger issue,” Kleiman said. “There are jobs out there. There are good-paying jobs. If you can deliver value, people are going to want it.”
Material from Bloomberg News was used in this report.