Mass layoffs at tech giants: why are they? – Technology
The technology sector announced 97,171 job cuts in 2022, 649% more than the previous year, according to consultancy Challenger, Gray & Christmas Inc.
In January 2023 alone, Google’s parent company Alphabet Inc., Microsoft Corp. and Amazon.com Inc. have collectively cut another 30,000 positions.
Although tech giants benefited from a boom in e-commerce and remote work during the Covid-19 pandemic shutdowns, many of these companies are now reporting disappointing growth rates and are facing falling share prices.
His response has been mass layoffs.
“The midnight of hypergrowth has come, when tech companies were spending money like rock stars in the 1980s,”
And it is that only in the United States, almost 194,000 workers in the technology sector have lost their jobs since the beginning of 2022, according to the technology website Layoffs.fyi.
Analysts point out that the technology industry is facing a period of turbulence, caused by high inflation and the continuous increase in interest rates, after the aforementioned bonanza.
These companies “have been hiring at a rate that was unsustainable and the deteriorating macroeconomic environment is now forcing them to lay off,” said Dan Ives of Wedbush Securities.
“The midnight of hypergrowth has come, when tech companies were spending money like rock stars in the 1980s,” the analyst added.
Microsoft Corp. announced that it plans to cut 10,000 jobsor about 5% of its workforce this year, in a move that seeks to address an increasingly bleak outlook.
The layoffs come at a time when the software giant said it is seeing customers tread cautiously as parts of the world are in recession.
Chief Executive Officer Satya Nadella said the company is seeing “customers optimize their digital spend to do more with less.”
While companies like Amazon.com Inc., Meta Platforms Inc. and Salesforce Inc. have announced job cuts by the thousands in recent months, Microsoft has so far taken minor steps to try to cope with the shaky global economic outlook and the possibility of a prolonged slowdown in demand for software and services.
The Redmond, Washington-based company has eliminated job openings and halted hiring, including in priority businesses such as security software and cloud computing.
Alphabet Inc., the parent company of Google will also remove about 12,000 jobs, more than 6% of its global workforce.
The cuts will affect jobs globally and across the company, Sundar Pichai, the company’s chief executive, said Friday in an email to employees, saying he takes “full responsibility for decisions we make.” They have brought us here.”
Thanks to its strong search business, Google has been one of the longest-resilient tech companies without laying off employees, but now it faces a slowdown in digital advertising and its cloud computing division continues to lag Amazon and Microsoft Corp.
“These are important times to sharpen our focus, reshape our cost base and direct our talent and capital to our top priorities,” Pichai wrote to his colleagues.
Alphabet will pay affected employees at least 16 weeks of severance and six months of health benefits in the United States, while in other regions they will receive packages in accordance with local laws and practices.
The e-commerce giant announced on January 5 that it will eliminate “just over 18,000” jobs worldwide.
This layoff plan mainly affected the stores managed by the group and the human resources division.
The distribution giant hired a large number of staff during the covid-19 pandemic to respond to demand and doubled the number of employees worldwide between the beginning of 2020 and the beginning of 2022, so at the end of Septemberthe company had 1.54 million employees.
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Meta, the parent company of Facebook, Instagram and WhatsApp, was among the first to announce the massive layoffs, announcing last November the suppression of 11,000 jobs, that is, 13% of its workforce.
It was the first time in its history that the company announced a restructuring of this size.
The decision was justified by the financial performance of Meta, which in the third quarter of 2022 was disappointing, with a sharp drop in its business volume and profits, in addition to a stagnation of its number of users.
At the end of September 2022, Meta had about 87,000 employees around the world.
After Elon Musk bought Twitter, in early November 2022, the social network launched a strong cut plan that affected half of its 7,500 workers.
To finance the purchase, which cost 44,000 million dollars, the extravagant billionaire borrowed heavily from the company, whose accounts were already weak, as it posted a significant deficit in the first two quarters of 2022.
Musk has even priced much of the furniture at Twitter’s San Francisco headquarters.
Computers, tables, chairs, coffee machines, pizza ovens, beer coolers, projectors are for sale. Heritage Global Partners will be in charge of this auction of 631 lots, whose bidding has already been opened.
With information from EFE, AFP and BLOOMBERG