Tech layoffs hurt workers in developing countries

AAcross Silicon Valley, tech companies are shedding their workforces to cut costs in anticipation of a global economic downturn.

Social media giant Meta announced earlier this month that it was laying off 11,000 of its employees, or 13% of its workforce. Since being acquired by Elon Musk in October, Twitter has laid off about 3,000 employees, or about half of its workforce. Meanwhile, Amazon is reportedly preparing to cut 10,000 jobs. And Microsoft, Lyft and Stripe also recently announced smaller cuts.

But it’s not just programmers with six-figure salaries and free lunches in sunny California who are affected. In a sign of how globalized the tech economy has become, tech workers who are now making just dollars a day in parts of the developing world are also losing their jobs as outsourcing companies that have relied on Silicon Valley clients begin to cut their workforces to stay afloat. Most of these people earn a fraction of their US-based counterparts, and some worry that the slowdown in the tech industry could push them below the poverty line.

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Over the weekend, the tech-focused newsletter Platformer reported that Twitter had laid off 4,400 of its 5,500 employees at contractors, including content moderators, many of whom are employed by third parties in the Philippines.

Among the other workers affected by recent industry cuts are hundreds of workers at CloudFactory, an outsourcing firm with offices in Kenya and Nepal, which counted Microsoft among its 600 customers, according to its Nov. 14 website. The company told employees it would cut about 12% of its workforce on Nov. 9, according to internal filings obtained by TIME, which were previously unreported.

“The changing economy is affecting many technology companies, including our customers,” CloudFactory CEO Mark Sears wrote in a message to all employees verified by TIME. “Sales are way below target, we’re losing money and we need to cut our costs significantly to save cash and improve our operational efficiencies… I was overly optimistic about our client’s [sic] Willingness to continue spending on our services even when the economy is declining.”

The memo said exiting employees would be offered a severance package, but didn’t specify the amount.

On November 15, CloudFactory’s website said it employs more than 7,000 workers in Kenya and Nepal. CloudFactory declined a request for comment on the story on Nov. 14, but said Microsoft is not among its customers. The following day, the Microsoft logo no longer appeared in the customer list on CloudFactory’s website. (Microsoft did not immediately respond to a request for comment.)

An employee in Kenya, who spoke to TIME on condition of anonymity out of concern for future job prospects, said his job, which makes less than $50 a day, has been affected.

“Right now in Kenya it’s hard to find work… I see a lot of people going into depression because the situation in Kenya is really bad right now,” the worker told TIME. “I’m one of those people.”

In Nepal, where labor laws offer fewer protections for workers, affected CloudFactory employees were fired almost immediately, according to two people with knowledge of the matter. In Kenya, where workers are better protected, affected employees were asked to submit an “expression of interest” if they wanted to remain employed at the company and await a decision scheduled for November 17.

“I still have bills to pay, I have rent, I need food. It’s going to be really tough,” said the Kenyan employee involved. “Some of my colleagues have loans from banks. How are they supposed to serve them without jobs?”

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The layoffs at CloudFactory reflect the rapid growth of the online outsourcing industry — known as cloudwork — in which tech companies assign simple but important tasks to workers in countries with high unemployment, low wages, and often lax health and safety regulations.

“The tech world extends well beyond Silicon Valley and its directly employed workers,” says Jonas Valente, a researcher at the Oxford Internet Institute’s Fairwork Project. “There’s a planetary workforce doing all sorts of jobs for tech companies. Full-time or part-time workers in outsourcing companies, particularly in countries in the Global South, typically have worse working conditions and worse contracts than those in big tech companies.” Valente adds that workers in countries with less protective labor laws often have little bargaining power and end up easier Targets for dismissal decisions can be.

According to the latest company reports, CloudFactory’s mission is to “connect 1 million talented people with meaningful work online”. The Kenyan employee involved was drawn to work at CloudFactory in part by the company’s focus on ethical and social values, but believes the company acted against them without warning in conducting this week’s layoffs. “We used to feel like family,” the person said. “All of this falls outside of the culture and principles that CloudFactory claims to have.”

The recent layoffs suggest that CloudFactory’s goal of connecting one million people to decent digital work is now further than ever. “It shows the precariousness of these jobs, but also the precariousness of the story that has been told, that these companies provide sustainable work,” says Phil Jones, a senior researcher at Autonomy, a think tank focused on the future of work. “In fact, much of this work is very volatile and can change as these companies evolve.”

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