The reason behind Tech layoffs

Companies in the tech sector have been laying off employees due to an increase in interest rates, which has raised the cost of their debts. In order to service the higher debt payments, companies need to make more money or cut their expenses. However, making more money is difficult during high inflation when people have less spending power. As a result, companies opt to cut expenses by laying off employees. This trend has particularly affected smaller companies that are still in the early stages, as their valuations have significantly dropped. The decrease in valuations negatively impacts their ability to secure loans, as banks calculate loan amounts based on a percentage of the company's valuation. The higher interest rates and lower valuations have also contributed to the crash in tech stocks.

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