Tech Layoffs Surge: What the Second Wave Means for Startups and Workers in 2025

The tech industry is facing a seismic shift as a second wave of layoffs reshapes the startup landscape, altering the dynamics of the labor market.

According to insights from Pavel Shynkarenko, founder and CEO of Mellow, this wave is rewriting expectations for both workers and employers, as reported by Crunchbase News.

Historical Context: A Pattern of Boom and Bust

Historically, the tech sector has experienced cycles of rapid growth followed by sharp contractions, with notable layoffs during economic downturns like the dot-com crash and the 2020 pandemic-induced cuts.

Unlike previous waves, the current layoffs are driven by a combination of over-hiring during the pandemic boom, inflationary pressures, and a pivot toward efficiency over expansion.

Impact on Workers: A Shifting Job Market

Workers are now grappling with a tightening job market, where the supply of talent exceeds demand, forcing many to reconsider career paths or accept lower compensation.

This shift disproportionately affects early-career professionals and those in non-core roles, who face heightened job insecurity.

Startups Feel the Squeeze: Employer Advantage

For startups, this wave presents a strategic advantage, allowing them to hire skilled workers at reduced costs while streamlining operations, as Shynkarenko notes.

However, this employer-driven market risks eroding employee morale and trust, potentially impacting long-term innovation and retention.

Looking Ahead: Future Trends in Tech Employment

Looking to the future, experts predict that automation and AI could further accelerate layoffs, with a recent post on X suggesting that up to 41% of companies plan AI-driven cuts.

Startups may increasingly turn to fractional or contract workers, a trend Shynkarenko advocates for as a cost-effective solution through platforms like Mellow.

Ultimately, while this second wave poses significant challenges, it may also catalyze a more sustainable approach to growth in the tech ecosystem.