Alphabet – the parent company of Google – on Friday announced slashing its workforce by 12,000, or 6 percent, in a latest episode of a series being witnessed in the tech industry that is witnessing a hiring freeze, with some experts describing it as a warning sign for overall economy.
The firings add to tens of thousands of other job losses recently announced by Microsoft, Amazon, Meta and other tech companies as they tighten their belts amid a darkening outlook for the industry.
It means there have been at least 48,000 job cuts announced just this month after the pandemic-led boom that boosted tech companies and their valuations has now turned into a bust in the face of decades-high inflation and rapidly rising interest rates.
Just this week, Amazon said it was axing 18,000 workers (6 percent) of its office staff, while business software firm Salesforce said it would reduce its workforce by 10 percent, or roughly 8,000 people.
The big culprits
One of the big news stories in recent months has been Elon Musk’s takeover of Twitter and mass layoffs at the social platform. But Twitter isn’t the only tech company making drastic changes to its staffing as fears of a looming recession continue into the New Year.
The reason is simple. Although the tech giants made a huge profit out of the pandemic, high interest rates and the cost of living crisis means consumers are spending less money. That, in turn, impacts the revenue of these companies. Less revenue means businesses need to cut costs.
However, the tech sector grew exceptionally quickly over the last several years due to increased demand, as employees began to work remotely. But as pandemic lockdowns ended and people started going outside again, revenue growth began to falter.
Following is the list of the tech giants contributing to unemployment around the globe.
Meta: For the first time in its history, social media giant Meta announced in November that it would lay off 11,000 workers, or roughly 13 percent of its staff. This marked one of the biggest tech layoffs of 2022, as the company grappled with a weak advertising market and mounting costs.
The company will make reductions in all of its businesses (such as WhatsApp, Facebook, and Instagram), said CEO Mark Zuckerberg. Meta is also prolonging its hiring freeze through to the first quarter of this year, with a few exceptions.
Twitter: Elon Musk also began staff layoffs in November. Since then, the company has laid off over half its workforce, and further redundancies are reportedly on the cards.
Several privacy and compliance officers have also quit, as well as the company’s trust and safety leader.
Amazon: The e-commerce giant has halted “new incremental” hiring across its workforce. Following a months-long review, Amazon told employees in some unprofitable units to look for jobs elsewhere in the company, the Wall Street Journal reported in November.
It is also moving to redeploy staff from certain teams to more profitable areas, and closing teams in areas such as robotics and retail.
On December 2, it was reported that Amazon was making major cuts to its hardware team, with those working on Alexa, Kindle, and Halo at highest risk.
It’s believed that investors in the e-commerce giant want to make further job cuts soon, with Bloomberg reporting there’s a new round of job cuts coming that will affect 18,000 staff members.
Apple: Apple has “paused almost all hiring,” a decision that could last until later this year. Earlier this month, around 50 employees on its Next Apple News team lost their jobs, with the company citing continuous losses.
Microsoft: Towards the end of last year, Microsoft set the ball rolling and cut about 1,000 jobs. On January 18, the software giant Microsoft said it would cull 10,000 jobs, or approximately 5 percent of its workforce, in response to “macroeconomic conditions and changing customer priorities”.
Is it a warning sign for overall economy?
Yes! It is for the likes of Jeffrey Pfeffer, professor at Stanford University’s Graduate School of Business. He says many of the layoff announcements reflect peer pressure, as executives feel compelled to copy other firms making cuts – even as they continue to churn out healthy profits.
The BBC quoted him in a report last month where he says if the sentiment spreads, as he expects, it risks turning the forecasts of economic hardship into reality.
“Companies do what other companies do,” he said. “This becomes a self-fulfilling prophecy because if everybody lays somebody off, the unemployment rate will go up and we will in fact have a worse economy.”