Explained | What does the recent wave of tech layoffs mean? 

Story so far: New York-based International Business Machines (IBM) last week became the latest company to join a list of technology companies that have made major layoffs beyond the second half of 2022. The company said it would furlough about 3,900 employees. This follows what has been described as a clock ticking Big His Tech’s “Midlife Crisis” or Hypergrowth’s “Midnight”. Tech giants Alphabet, Amazon, Meta, and Microsoft have announced they have cut thousands of jobs in the past two months. Also in the background are the US Federal Reserve’s rapid interest rate hikes to curb high inflation and weaker consumer demand amid the global recession.

Who laid off and how many?

More than 150,000 jobs will be cut in the tech sector alone in 2022, with several more job cuts announced since the start of the year, taking the number to over 40,000. Meta, owner of Google parent Alphabet, Amazon, Microsoft and Facebook, four of America’s largest tech companies, accounts for his 51,000 total technology layoffs announced in the past few months. increase. Tech sector layoffs in 2022 are up 649% year-over-year, according to consulting firm Challenger, Gray & Christmas Inc.

meta: Meta Platforms Inc., which owns Facebook, announced last November that it had laid off more than 11,000 people or 13% of its workforce. The mass layoffs were Meta’s first in his 18-year run.

microsoft: The Washington-based Bill Gates-founded technology company has announced it will cut 10,000 jobs or less than 5% of its headcount by March 2023, costing revenues $1.2 billion.

Amazon: In early January, Amazon, the e-commerce, cloud computing and streaming giant and America’s second largest private employer after Walmart, laid off 18,000 or 18,000 employees in company-wide layoffs. announced a 6% reduction.

Google: Google’s parent company, Alphabet, said in a staff memo by boss Sundar Pichai on Jan. 20 that it would cut 12,000 jobs or 6% of its workforce.

Spotify: Daniel Ek, CEO of music streaming platform Spotify, said in a memo to all employees that the company will cut 6% of its global workforce and lay off about 600 people.

Salesforce: San Francisco-based tech company Salesforce announced on Jan. 4 that it would cut its workforce by 10% and close some offices.

twitter: Following Tesla CEO Elon Musk’s $44 billion acquisition, social media company Twitter Inc. has made aggressive job cuts, laying off employees in various departments such as communications, content curation, product and engineering. Laid off half or about 3,700 employees.

others: Networking and collaboration solutions company Cisco announced in November that it would furlough 5% of its workforce as part of a restructuring. His computer maker HP also says it will cut up to 6,000 units by the end of fiscal 2025.

Do they influence Indian professionals?

According to some industry sources, between 30% and 40% of the laid off employees are IT professionals in India, a significant number of whom hold H-1B and L1 visas. The H-1B visa is a nonimmigrant visa that allows U.S. companies to place foreign workers in specialized occupations that require theoretical or technical expertise. Tech companies rely on it to hire tens of thousands of employees each year from countries such as India and China. A significant number of them are vying for the option to stay in the United States and find a new job after losing their job within the months prescribed to obtain under these alien work visas.

How big are large tech layoffs in context?

With the advent of the coronavirus pandemic, work is becoming more remote, e-commerce is growing amid lockdowns around the world, and the tech sector is booming as homebound people spend more and more time online. grew to Riding on accelerating growth, large tech companies and even some smaller ones have continued to hire since the beginning of the pandemic.

Case in point, Amazon, one of America’s four largest technology companies, doubled its headcount, growing from 798,000 to a whopping 15,44,000 before its recent layoffs. Microsoft’s employee count went from 144,000 at the end of 2019 to 221,000 in 2022. Over the same period, the number of employees at Google’s parent company, Alphabet, led by Sundar Pichai, increased from 118,899 to 186,779 over the same period. Meanwhile, Mark Zuckerberg’s Meta has more than doubled the number of employees from his nearly 45,000 to over 87,000.

Analysts are almost unanimous in saying big tech companies are “optimizing” growth rather than shrinking. NPR By Professor Daniel Krum of Columbia Business School.Analysis by Washington Post Tech companies that have hired aggressively during the pandemic have probably envisioned rapid growth becoming the ‘new normal’ and are currently cutting headcount as they did before without the rapid growth brought about by the pandemic. I am pointing out that you are trying to This is evident in the introspective notes written by company CEOs when announcing layoffs, many of them admitting they may have overhired. Apple, which has been going, remains unusual and has so far postponed layoffs. Musk was confident he could run the platform without half the former employees.

For example, Meta CEO Zuckerberg, which doubled its workforce in the year of the pandemic, said it would be wrong to assess the increase in revenue during that period as a “permanent acceleration.” rice field. In a message to his employees, he said: I got this wrong and I take responsibility for it. ”

“Over the past two years, we have seen a period of dramatic growth. For this reason, we have adopted economic realities that are different from those we are currently facing. It was more difficult.”

In particular, despite a higher number of layoffs than these companies had previously implemented, new york times noted that only a fraction of the pandemic adoptions by these companies would be reversed.Ah Reuters Analysis shows that even if all tech companies cut 5% of their workforce, tech jobs would remain at 4.2 million (nearly 5% more than at the end of 2019).

Do layoffs mean problems for the tech industry?

As noted by the CEO, growth has indeed slowed from pandemic levels. The analyst also predicts that five big tech companies, including Apple, will report dismal profits in the period from October to December (2022).Ah Reuters Amazon is set to report a 38% drop in revenue and its slowest revenue growth in over 22 years, according to the analysis. Meta, on the other hand, could see profits plummet by 42%. However, these tech giants remain huge and profitable. Microsoft reports a profit of more than $16 billion for the quarter ending December 2022, compared to a profit of about $11.6 billion for the same period in 2019. $1 billion for the quarter ending September 2022.

Additionally, analysts like Guidehouse Insights’ Sam Abuelsamid said: NPR Job cuts are a form of belt tightening “intended to send a message to shareholders at a time when tech stock prices are plummeting.” , saw a 24% drop across the larger tech industries. Abuelsamid said companies are showing investors to be “cautious” and want to get back on a growth trajectory after overspending. This was reflected in comments from Google boss Pichai, who said it was time for the company to “shorten its focus,” redesign its cost base, and direct people and capital to its “top priorities.” Meta is also looking to keep costs down as its investments in the Metaverse have failed to gain momentum.

Additionally, these companies have recently invested heavily, especially in artificial intelligence-driven technologies. For example, while cloud revenues are plunging, Microsoft is considering extending his $1 billion stake in OpenAI, the startup behind the viral new chatbot ChatGPT. The video game company is also considering buying Activision Blizzard, which will bring a strong workforce of 10,000. Meanwhile, smaller startups taking advantage of the pandemic’s digital boom are trying to keep costs down while venture capitalists are reluctant to bet on their projects.

What do layoffs say about the larger US job market?

The tech sector in particular has seen job cuts, but the U.S. job market remains strong and the number of Americans filing new claims for unemployment benefits is down, according to Labor Department data.Economist Jennifer Lee said bloomberg Technician layoffs are not “leaders of the entire labor market.” Analysts note that tech companies account for about 2% of all jobs in the country, in contrast to the larger sector still hiring. The labor market remains resilient despite the Fed’s aggressive measures to contain inflation.

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