- Amazon, Microsoft and Google announced this week that they will lay off a total of 40,000 employees.
- These companies continued to hire heavily during the pandemic boom, but are now cutting back.
- This signals that this era of massive growth is over and companies are re-prioritizing.
It’s been a rough week for Big Tech employees.
In the past three days, three of the biggest tech companies have initiated or announced layoffs, affecting more than 40,000 workers.
On Wednesday, Microsoft announced plans to lay off 10,000 employees by March. Then on Friday, Google CEO Sundar Pichai announced that the search giant would cut 12,000 of his employees.
“It’s bloody,” said a Microsoft employee.
Tech companies have started hiring in droves during the Covid era as their products have become the backbone of the world’s remote work offices. But that record hiring took a toll on the earnings of these companies. As the economy worsens, big tech companies are cutting some of their workforces.
In a report, Evercore analyst Mark Mahaney said the companies were in “very different economic realities.”
Many predict that the industry will undergo irreversible changes as employees reel from new peak layoff fears. On the other hand, industries less focused on hypergrowth are emerging, stocks are more stable, headcounts are more stable, and headcounts are shrinking. Employees, much slimmer compensation.
Microsoft and Amazon declined to comment, and Google did not respond to a request for comment.
Many Googlers feared layoffs after the company laid off workers last fall. This week, those concerns became a reality.
Last fall, when companies like Amazon and Meta began layoffs, Google looked like it would hold up. The company prides itself on being employee friendly and has never done a mass layoff before.
But Googlers still wondered if they were next. Internally, rumors of job cuts circulated, with employees posting memes on Memegen’s internal site explaining how they were concerned about the potential downsizing.
When employees asked CEO Sundar Pichai about possible job cuts last year, the CEO was Mom.[It’s] It’s hard to predict the future,” he told employees in December.
Recently, employees said those concerns were exacerbated after Alphabet’s healthcare subsidiary, Verily, laid off 200 employees on Jan. 11, in addition to Microsoft and Amazon’s layoff announcements. .
A former Google recruiter who was laid off on Friday said, “Seeing the layoffs from Microsoft and Amazon, it was inevitable that it would come to us.
The employee first learned of the layoffs in a news report before realizing he had been laid off after checking his personal email account. Later in the day they learned that the manager had also been fired.
Another Googler who worked as a recruiter said he woke up to a barrage of text messages from friends asking if he was okay before he knew his work email was disabled.
“We were in the dark,” said the recruiter.
Layoffs last fall came at companies such as Amazon, Meta, Snap, and Twitter that rely on online advertising for revenue, but the job cuts at Google are a sign that the online advertising business is going bad.
Pichai told employees that these recent job cuts reflect the company’s priorities for the coming year.
“We undertook a rigorous review across product areas and functions to ensure that our people and roles were aligned with our top priorities as a company,” Pichai said in a note. It reflects the results of the review.”
Google Cloud has had some job cuts, but they’ve had little impact compared to other teams, an employee familiar with the team told Insider.
Google may also prioritize staff that will help it maintain its edge in AI fighting the Microsoft-backed OpenAI threat that spawned ChatGPT. According to the New York Times, the company is preparing to launch more than 20 of his new AI products, incorporating chatbot functionality into its search engine.
ChatGPT isn’t an “existential risk” for Google, but it represents a “sign of urgency,” Mahaney wrote in a note to clients.
Microsoft may be investing $10 billion in OpenAI’s ChatGPT, but will lay off 10,000 employees next quarter.
Early Wednesday morning, Microsoft CEO Satya Nadella sent an email to employees saying the company intends to cut 10,000 jobs by March. Some employees pointed out that rumors of layoffs had been circulating for some time because the manager had not attended an important meeting the day before.
That morning, one of the affected employees said he met with the VP to tell him he would be fired and later said he had received details of a retirement package.
Some employees said their managers didn’t know about the plan.
The company expects to cut staff in the spring, but departments immediately affected included the team responsible for the Bing search engine and the Edge browser, known internally as WebXT. In addition to gaming, sales, recruiting, human resources, and consulting roles, members of Microsoft’s hardware division, including Surface Hub, were also affected.
The company cut at least 1,000 jobs the day it announced the layoffs.
The timeline makes many employees nervous and anxious to see who will be next.
“Morale across the team is clearly low,” said another Microsoft employee. “Every shuffle makes it difficult to be productive.”
To help managers deal with employee sentiment, the company sent out an email with phrases and tips they can use to communicate with employees about downsizing. The email instructs managers to “show empathy and compassion” and tells employees to “continue to make sure they’re matching the right resources to the right opportunities.” .
An executive informed of the company’s layoff plans said managers were asked to identify employees who could be laid off in the coming months and those who should develop performance improvement plans. , told Insider that this is not company-wide guidance.
The company’s operating system, Windows, experienced growth headwinds as the remote work boom ended, but its cloud division, Azure, is still growing, albeit less than expected. The company also still has plenty of cash to potentially make acquisitions to add to its sprawl of enterprise technology offerings such as Azure Cloud, Office 365, LinkedIn and GitHub. Microsoft is also reportedly investing his $10 billion in OpenAI, the organization that develops ChatGPT.
“Investors can expect to hear more about Microsoft’s big vision,” Dan Morgan, senior manager at Synovus Bank, said in a note.
Amazon calls for unionization after layoffs
On January 4th, Amazon CEO Andy Jassy announced that the company would cut 18,000 jobs, mostly in human resources and retail operations.
That was after media outlets reported last fall that the company had cut about 10,000 jobs in retail and Alexa’s voice assistant division.
The layoffs began Wednesday.
Amazon HR boss Beth Galetti reiterated in an email to employees Wednesday that most of this year’s restructuring will affect the retail division (Amazon stores) and HR (people experience and technology division).
On Wednesday, an Amazon employee learned by email that he had been laid off.
In one of the emails seen by the insider, Galletti wrote, “Unfortunately, your role has been removed.” “You no longer have to do any work on Amazon’s behalf and it will take effect immediately.”
Many Amazon employees were frustrated by the ambiguity and lack of communication in the overall downsizing process. As the insider previously reported, when the layoffs began, employees rushed to her internal Slack channel to compile a list of affected teams.
Amazon’s cloud division was largely spared, according to several Amazon Web Services employees who spoke to insiders.
Gone are the days when tech companies spent money like rock stars
Over the past decade, big tech companies spent money “like 1980s rock stars,” writes Dan Ives, managing director of investment firm Wedbush.
We are currently cutting costs to weather a potential recession.
On the other hand, technology companies may look very different this decade than they did in the past. As companies like Google, Amazon, and Microsoft cut costs, they find leaner ways to operate, and stock prices stabilize. This could restart the “next growth cycle” in the next few years, writes Ives.
These headcount reductions may also reset compensation. Equities have long been a major part of Big Tech compensation, but the giants are seeing the value of equities declining. This will have a domino effect for the industry as a whole. Startups are able to hire employees, including recently laid-off employees, with lower compensation packages, reducing the value of stock options.
As Ives pointed out, Silicon Valley’s “hyper-growth” era may be over — at least for now.
Are you a Microsoft or Amazon Web Services employee or have an insight to share?astewart@insider.com).
Are you a Google employee? Contact Ellen Thomas by email (ethomas@insider.com) or Signal: (+1-646-847-9416). Please contact Thomas Maxwell by email (tmaxwell@insider.com) Also Signal: (+1-540-955-7134).
do you work for amazon? Any tips? Contact reporter Eugene Kim on Signal or Telegram (+1-650-942-3061) or email (ekim@insider.com).
Communicate using non-work devices. For more tips on sharing information securely, see our Insider source guide.