Mexico’s technology market shows signs of cooling ahead of a forecasted economic recession, with job creation continuously decelerating, dropping 17.98 percent since July 2022, according to GlobalData Analytics database. This adjustment in market behavior comes despite anticipation that investments in technology will carry into 2023, potentially handicapping technology companies’ ability to meet demand.
“If companies choose to keep more people on the payroll than they have in past downturns, that might be reflected in tighter profit margins than we [have] seen in past recessions. But the payoff will come during the ensuing recovery, when companies will be in a better position to take advantage of rising demand,” wrote opinion columnist Conor Sen for The Washington Post.
Domestic and foreign startups operating in Mexico have been among the first to announce layoffs, including Brazilian enterprise digital commerce platform VTEX, which laid off 13 percent of its employees in May. In June, Mexico’s largest cryptocurrency platform Bisto announced that it would lay off 10 percent of its staff in preparation of a “crypto winter.” A month later, Mexican proptech Casai would announce layoffs in both Mexico and Brazil ahead of a potential merger with Brazilian proptech Nomah.
At the same time, US technology companies across industry sectors have laid off about 42,000 technology workers through mid-September and fully expect more layoffs to follow, according to Crunchbase News. Meanwhile companies that did phenomenally well during the pandemic, Meta and Intel, are expected to lay off thousands in the coming weeks, according to reports by New York Times and Bloomberg. More optimistic players including Apple and Amazon are being cautious, opting for hiring freezes on new corporate roles until there is greater market clarity.
This apprehensive market behavior comes despite anticipation that investments in technology will remain constant if not continue to grow into 2023 as companies look to fortify their digital transformation strategic ambitions. In other words, technology companies with a B2B orientation are uniquely positioned to experience only a temporary dip in demand before they are expected to rebound. Consequently, massive layoffs may only be hurting the company’s ability to meet demand upon market recovery, calling for a more restrained approach to downsizing.