In January 2021, Microsoft CEO Satya Nadella explained how the first year of the pandemic caused an unexpected shift to online services and his company benefited from the trend. “What we have seen in the past year is the dawn of the second wave of digital transformation that is sweeping through every company and every industry,” he said.

Two years later, the situation in the technology industry is not so rosy. Last week, Microsoft announced plans to cut 10,000 jobs as businesses reassess their digital spending during the pandemic amid wider economic uncertainty. Microsoft customers, Nadella now says, are now trying to “do more with less.”

Microsoft is not the only company to experience such a dramatic turnaround. Yesterday, streaming company Spotify announced that it plans to cut 6% of its workforce, which equates to about 600 jobs. “In recent months, we have made significant efforts to contain costs, which, however, have not been enough,” said Daniel Ek, CEO of the company, announcing the reduction of approximately 600 jobs. “Ultimately, I was much more optimistic about investing in our revenue growth,” he said, speaking in a tone similar to that used by several technical leaders in similar statements. The company’s operating expenses grew twice as fast as last year’s revenue as Spotify invested enough capital to support the podcast sector, Reuters reports.

Companies are re-evaluating their digital spending during the pandemic amid wider economic uncertainty.

Meanwhile, Google’s parent company Alphabet followed suit late last week by announcing plans to cut about 12,000 jobs, or more than 6% of its workforce. Over the past three months, Amazon, Google, Microsoft and Facebook parent company Meta have announced plans to lay off more than 50,000 people. It’s a 180-degree reversal from the early days of the pandemic, when the tech giants ramped up to meet massive demand as countless households lived, shopped, and worked online. At the time, many technology executives seemed to believe that this growth would continue indefinitely. Google has taken a number of cost-cutting steps in recent months, canceling the next generation Pixelbook laptop and permanently shutting down Stadia, its cloud gaming service. Earlier in January, Verily, Alphabet’s biotech arm, said it was cutting 15% of its staff.

As of September 2022, Amazon’s workforce more than doubled from the same month in 2019, according to CNN. Meta nearly doubled its headcount between March 2020 and September 2022. Microsoft and Google have also hired thousands of additional employees, as have other tech companies such as Salesforce, Snap and Twitter. All of them have announced layoffs in recent weeks. It appears many tech executives underestimated whether this growth will continue as people return to their offices and live offline.

In recent months, higher interest rates, as well as worries about inflation and recession, have pushed down advertising and consumer spending, hurting tech companies’ earnings and share prices. Wall Street analysts are now forecasting single-digit revenue growth during the all-important December quarter for Google, Microsoft and Amazon, and declines for Meta and Apple. Technology executives from Meta’s Mark Zuckerberg to Salesforce’s Mark Benioff blame themselves for over-hiring early in the pandemic and misunderstanding how demand for their products will change as lockdowns ease. But as CNN points out, none of the big tech executives noticed that these mistakes affected their position or pay while tens of thousands of workers lose their jobs. And by the looks of it, tech layoff announcements are likely to continue in the coming months.