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Growth over profitability has been the mantra of the tech industry for more than 20 years, but times are changing. The investment dollars that once motivated companies to follow this path are now being directed elsewhere. Part of this reality stems from the economy, but it’s also due to investment dollars being earmarked for AI development.
This evolution is causing aggressive changes to tech business models, directly impacting headcount.
In Q2 of 2023, TSIA Cloud 40 index reports showed tech companies' profit margins down 12%. One year later, that measure demonstrated an enormous jump to 0.1%. The key to this dramatic change has been trimming head count. However, trimming further would cut into most companies’ functional muscle. As a result, these businesses must find a new path to improving their incoming revenue.
