Just one week into 2023, the idealistic dream of a rising tech industry looks hopelessly misplaced.
Tech giants Salesforce and Amazon delivered a double whammy of bad news on Wednesday, announcing drastic layoffs designed to right-size their workforces following a pandemic-fueled hiring boom. Did.
Salesforce plans to cut about 10,000 jobs, or about 12% of its headcount, as sales growth slows. Amazon said in November that it now plans to cut 18,000 jobs from an earlier estimate of 10,000, with CEO Andy Jassy citing in part an “uncertain economy.” Amazon layoffs are expected to affect about 6% of the company’s workforce.
The announcement certainly won’t be the last this quarter for major tech companies. It is a harbinger of interest rates.
“The new reality is that demand is fading,” said Jefferies analyst Brent Till. luckof Alena Botros last month. “And employee hiring is so brisk that further layoffs are inevitable when we’re effectively heading into a recession.”
For now, attention will be turned to companies that have continued to add jobs during the pandemic but have not cut their workforces significantly after last year’s sales growth slowed.
Apple and Alphabet have not introduced large-scale layoffs, opting instead to freeze hiring and eliminate positions through downsizing.But new york times cited interviews with 14 current and former employees last week, reporting that Alphabet’s Google division had “become a tinder” over possible layoffs.
Microsoft will face questions about the size of its workforce after cutting a small portion of its workforce last year. The tech giant’s shares fell 5% on Wednesday after a downgrade from UBS and another 3% in midday trading on Thursday.
The same is true for Samsung, which is grappling with a significant slowdown in semiconductor sales and sluggish demand for consumer electronics. CNBC reported Wednesday that analysts expect the South Korean giant’s quarterly earnings outlook to drop sharply this week.
Longer term, however, it will be interesting to see if this pattern of rapid hiring followed by rapid firing continues.
In some ways, the current environment reflects the reorientation of technology in the mid-2010s. At this time, some large companies emerged from the Great Recession and hired like crazy, scaling back amid tumultuous times within the industry.
“I see this as another chapter in the Silicon Valley boom-bust story,” said a professor of history at the University of Washington. Code: Silicon Valley and America’s Remake, told Yahoo Finance. “It had a rhythm and it was a long boom.”
But the extent of mass hiring caused by the pandemic, fueled by the little-founded belief that COVID will dramatically reshape our habits, was unprecedented. For example, Microsoft added 58,000 employees between mid-2020 and mid-2022, but at the height of the last boom he added 34,000 in two years. bottom.
Over and over again, tech executives have repeated false optimism that global economic growth and demand for tech products will propel the industry to greater post-pandemic heights.
In a memo to employees Wednesday, Salesforce CEO Marc Benioff said, “We hired too many people because the pandemic accelerated our earnings, leading to this recession we’re facing now. take responsibility for it.
While some employees and managers have benefited from the mass hiring, the strategic approach has led to painful and destabilizing events for thousands of employees. The question is whether tech leaders will adjust their hiring habits and opt for a slightly more conservative approach when the frothing cycle is in full swing.
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Cut out China. Dell We are taking drastic measures use less chips Nikkei Asia reported on Thursday that other components of its products are manufactured in China, citing rising tensions between the Republic and the United States. The company said it aims to phase out the use of Chinese semiconductors by 2024. Dell officials are also asking his component suppliers to move production out of China in order to diversify his supply chain.
Catch a small lightning bolt. ford Approximately 61,600 electric vehicles sold In 2022, the U.S. will see a 126% year-on-year increase, further cementing its position as the second-largest domestic EV maker in the auto industry, Bloomberg reported Thursday. Metro The Detroit-based automaker benefited from increased sales of its Mustang Mach-E SUV and the debut of his F-150 Lightning his pickup his truck, which launched this spring.Ford’s EV sales still lag far behind Tesladelivered 1.3 million electric vehicles worldwide in 2022, general motorsAbout 39,000 EVs were sold last year.
Open an audiobook. applethe books section of Features AI-powered narration options Some of the titles are a manifestation of the tech giant’s ambitions for the burgeoning audiobook market, TechCrunch reported Thursday. The iPhone maker says the program, which uses AI technology and recorded human voices to generate narration, will reduce production costs and enable more authors to turn text into audiobooks. This feature is currently limited to select fiction books, but Apple plans to expand its availability.
Good news for gamers. Sony video game chief Jim Ryan said Wednesday, the company’s The shortage of PlayStation 5 has been eased After more than two years of manufacturing challenges, The Verge reported. At his CES, Ryan said customers buying his PlayStation 5 console from retailers “should have a much easier time.” Strong demand and supply chain issues have made it difficult for gamers to buy the hardware, but according to Sony officials, about 30 million consoles have been sold to date.
food for thought
No more competition? The tech giants have yet another reason to ridicule the Federal Trade Commission leaders on Thursday. Led by Democrats, he proposed a nationwide ban on the use of non-compete clauses by the FTC. This clause is often used by employers to discourage workers from jumping on competitors or starting their own startups. wall street journal report. Some technology companies use non-compete clauses to protect their business interests and sensitive data, but such provisions are not enforceable in California. But FTC officials and labor researchers argue that the ban stifles wages, stifles entrepreneurship, and unfairly favors businesses over the working class.
The FTC said the non-compete clause constitutes an exploitative practice that undermines a 109-year-old law prohibiting unfair methods of competition.
Non-compete clauses, which typically bar employees from joining competitors for a period of time after they leave, affect nearly one in five American workers, according to agencies. Long associated with high-paying managers, the clause also applies to low-paid workers who don’t have access to trade secrets, strategic plans and other reasons that prevent them from switching jobs, the agency said. there is
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