Business
For tech giants, it’s season of long knives
Adebayo Obajemu
(agency reports)
As inflation, supply-chain problems, and geopolitical turmoil curb revenue growth for tech companies, they have resorted to reducing headcount — some with massive layoffs — to bolster their balance sheets.
Technology companies since last year have been hit with global economic turbulence that is slowing growth and spurring widespread layoffs.
According to TrueUp’s tech layoff tracker, there were 1,405 rounds of layoffs at tech companies globally through the first week of December, affecting 219,959 people.
It must be noted that this string of layoffs at tech giants has reversed small part of pandemic hiring spree.
But even after the layoffs, their work forces are still behemoths so to say.
The big tech companies added thousands of workers during the pandemic, as profits soared.
For a stretch of the pandemic, tech companies couldn’t hire fast enough. Talent wars broke out in Silicon Valley, with firms vying for software engineers, often lavishing extravagant perks on their new and would-be hires. As profits soared, executives acted as if the party would never end.
Now, it has — and workers are bearing the brunt of pullbacks. Nearly 200,000 tech employees have been laid off since the start of 2022, according to Layoffs.fyi, a site that tracks job cuts in the sector. Four of the largest tech companies — Alphabet, Amazon, Meta and Microsoft — have announced a total of more than 50,000 job cuts since December 2022.
In announcing the layoffs to employees, executives struck notably apologetic tones, expressing regrets about overzealous expansion and rapid hiring. The executives pointed to economic factors, made worse by inflation and rising interest rates. But they are also admitting that they over-hired, misreading the durability of the pandemic acceleration in the growth of online services.
AMAZON
The tch giant has1.54 million employees, and laid off 18,000 which is 1.2% of work force, according to Company reports By The New York Times. Since the end of 2019, the company has grown by 728,000 people.
“As part of our annual planning process for 2023, leaders across the three levels have been working with their teams and looking at their work force levels, investments they want to make in the future, and prioritizing what matters most to customers and the long-term health of our businesses. This year’s review has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years,” Andy Jassy, chief executive, said on January 4, 3023.
ALPHABET
The firm has 186,779 employees, out of which 12,000 were laid-off, representing 6.4% of work force.
“I take full responsibility for the decisions that led us here. Over the past two years we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today,” said Sundar Pichai, chief executive, on January, 20.
META
Out of 87,314 employees, 11,000 were laid offs, which is 12.6% of work force.
“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected,” noted Mark Zuckerberg, chief executive on November 9, 2022.
MICROSOFT
It has 221,000 employees and 10,000 layoffs or 4.5% of work force.
“We’re living through times of significant change, and as I meet with customers and partners, a few things are clear. First, as we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less.”
The layoffs did not start in 2023, there had been some in the preceding year.
Low-code business software company Airtable announced it would be laying off 254 employees across business development, engineering and other teams, around 20% of its workforce. Alongside the cuts to individual teams, Airtable’s chief revenue officer, chief people officer and chief product officer will also be leaving the company.
Sources reported that Amazon plans to lay off as many as 20,000 employees across the company in the coming months, about twice as many as previously reported by the New York Times in November. The plan for mass layoffs comes after the retail and cloud computing giant makes cuts after going on a hiring spree during the pandemic.
Twenty thousand employees are the equivalent of about 6% of corporate staff, or about 1.3% of Amazon’s total 1.5 million-strong workforce including global distribution center and hourly workers.
When posting fourth quarter 2022 financial results, which saw a year-on-year decline in revenue of 11.2% to $14.8 billion, HP also announced that it expects to lay off 4,000 to 6,000 employees by the end of fiscal year 2025, reducing its 51,000-strong global workforce by about 12%.
The layoffs will be part of a HP’s “Future Ready” strategy, announced in conjunction with its quarterly results. In a conference call with analysts, HP President and CEO Enrique Lores said the strategy will generate at least $1.4 billion in savings by year-end fiscal year 2025, allowing the company to steer through what he described as “near-term market headwinds” and mitigate softness in HP’s core markets.
In the third quarter this year, the company’s personal systems, consumer, and commercial segments fell by 13%, 25% and 6% respectively. Notebook and desktops units also saw a decline, with units decreasing by 21% overall.
On November 17, despite posting record quarterly revenue of $13.6 billion, Cisco announced it would be laying off 4,100 employees, around 5% of its 83,000-strong workforce.
In an 8-K filing for its fiscal first-quarter, the company announced a restructuring plan “in order to rebalance the organization and enable further investment in key priority areas. This rebalancing will include talent movement options and restructuring.” The company said it will make some real estate changes as well.
Speaking to analysts after the results were posted, Cisco CFO Scott Herren said: “Don’t think of this as a headcount action that is motivated by cost savings. This really is a rebalancing.”
Asana’s chief operating officer (COO), Anne Raimondi, took to LinkedIn to announce that the company was reducing the size of its global workforce, estimated to be over 1,600 employees, by around 9%, equating to 97 job losses.
In a statement, the company said the layoffs were part of a “restructuring plan intended to improve our operational efficiencies and operating costs and better align Asana’s workforce with current business needs, top strategic priorities, and key growth opportunities.”
Despite reporting a 51% increase in revenue, for the quarter ending July 2022, Asana reported a net loss of $62.6 million.
Amazon is set to cut close to 10,000 employees, was the way it announced in a November 14 report from The New York Times. Though the cuts would be just a small fraction of Amazon’s 1.5 million-strong workforce, they include technology as well as corporate staff, according to the report.
While Amazon did not immediately respond to requests for comment, its most profitable division, Amazon Web Services (AWS), has been showing signs of growth deceleration since the beginning of this fiscal year.
During Amazon’s third quarter earnings call with analysts, CFO Brian Olsavsky attributed the decline to macroeconomic conditions that were forcing Amazon customers to cut down on spending.
Earlier in the month, the company sent out a note to all its employees saying that there was a hiring freeze being put in place for all Amazon corporate positions.
In a week marred by widespread job losses in the tech sector, Zendesk on Nov. 10 announced it would be cutting its headcount in an attempt to reduce operating expenses.
According to a recent filing with the U.S Securities and Exchange Commission (SEC), the CRM software provider is laying off 300 employees from its 5,450-person global workforce.
“This decision (layoffs) was based on cost-reduction initiatives intended to reduce operating expenses and sharpen Zendesk’s focus on key growth priorities,” the company wrote in the SEC filing.
The layoffs are estimated to set Zendesk back by about $28 million, primarily due to costs incurred on severance payments and employee benefits, the SEC filing showed.
On November 9, CRM software provider Salesforce announced that it would cut about 950 jobs from its global workforce, which consists of around 73,000. The announcement came less than a month after the company laid off at least 90, mostly contract, employees.
Like many tech companies, Salesforce originally implemented a hiring freeze in an attempt to avoid layoffs. However, that policy was rescinded in September and, despite experiencing a relatively successful year financially, the company has been facing pressure to cut costs since activist hedge fund Starboard Value took a stake in the company and immediately called for Salesforce to increase its margins.
Three days after it was first rumored that Meta CEO Mark Zuckerberg was planning to dramatically reduce the company’s headcount, the parent company of Facebook, Instagram and WhatsApp, confirmed that it was preparing to cut 11,000 jobs, impacting 13% of its global workforce.
In a statement, Zuckerberg said that the company had already sought to cut costs across the business, including scaling back budgets, reducing perks, shrinking its real estate footprint, and restructuring teams to increase efficiency.
The news came mere weeks after weak performances from Facebook and Instagram saw $80 billion wiped 2 Meta’s market value and its share price drop to less than a third of what it was at the start of the year.
