Layoffs in the Tech Industry on the Rise

Big Tech firms have dominated the US economy for the last decade. Apple, Amazon, Alphabet, and Microsoft have all surpassed the trillion-dollar value threshold, making them some of the most valuable companies in modern history.

However, during the last 12 months, cracks have started to appear in that domination. Industry leaders started issuing cutback warnings, and companies like Google, Microsoft, and Facebook implemented hiring freezes on the down low. The companies also issued conflicting signals during the summer, as economic confidence fluctuated between positive and negative.

Even further alarm has been raised in recent weeks as a wave of earnings announcements revealed that even the most enduring corporations are having significant difficulty maintaining the revenue growth they were able to display over the last few years.

Right now in response, across Silicon Valley and around the world, big tech companies are reducing their workforces in an effort to save expenses in preparation for a worldwide economic downturn.

Most of them are struggling with the same issues.

They grew too fast, inflation is too high, interest rates are rising, clients are low on purchasing power, borrowing to expand is more expensive, the strong dollar is eroding their profit margins, too many people were hired during the pandemic, supply chains were disruptive, and now growing recession fears.

Some in the industry are likening the recent activity to the dot.com crash from 20-odd years ago. Many are at least calling it the end of an era. Regardless, there will be plenty of talent looking for jobs in the near future, and it could just be the beginning.

Let’s take a look at just a few company examples that have been making the news over the last weeks.

Twitter

Elon Musk’s acquisition of Twitter hasn’t exactly been smooth sailing. Concerns about less moderating, fleeing advertisers, and threats to place the whole site behind a paywall followed the takeover, which was eventually achieved via a drawn-out litigation process.

Since then, it’s reportedly been losing millions of dollars a day and has been delisted from the New York Stock Exchange.

One week after taking control, on November 3rd, news sites began reporting that Musk wanted to lay off half of Twitter’s 7,500 employees.

Former Twitter CEO, CFO, director of legal policy and safety, and chief marketing officer were among those who were terminated from their jobs. Twitter’s senior privacy, security, and compliance executives have also just recently left the company.

Up to this point, Twitter has had to lay off approximately 3,700 of its staff.

Meta

This week, Facebook CEO Mark Zuckerberg said that the company’s parent company, Meta, will be laying off 11,000 workers, or 13% of its worldwide workforce. This comes as the company this year so far has seen its share price plummet by nearly 70%.

In the third quarter, Meta’s revenue was down 4% year over year to $22.1 billion, while costs and expenditures increased 19%. In contrast to the previous year, operating income fell 46% to $5.66 billion. Net income for the three months of Q3 was $4.4 billion, down 52% from the previous year’s $9.8 billion.

Zuckerberg owned up to the layoffs in a statement released by Meta, saying that he built the company too big and too quickly. He stated that he was misled by the sudden boom brought on by the pandemic and that he expected it to continue long after the outbreak.

He responded to the trend by increasing his workforce significantly. Ad spending has been falling, and Apple’s privacy update has gone into effect, so the company’s income can’t sustain the same investment in expansion and employees it had planned for before.

He went on to say that Meta would be taking “steps to become a leaner and more efficient company” Among these measures include cutting down on team budgets, eliminating perks, giving up certain office leases, and “extending our hiring freeze through Q1.”

Amazon

With online sales slowing, Amazon has seen its share price drop by more than 40% this year. This week, it was reported by The New York Times that the business intends to shed 10,000 employees, or around 3% of its workforce.

According to its Q3 earnings, the company reported that it had actually fared quite well compared to many of its tech peers, but was still below market expectations. Net sales in the third quarter were $127.1 billion, up 19% year over year.

The company hired thousands of new staff during the boom times of the pandemic, but is now having to come to terms with slowing demand. Recently they implemented a hiring freeze while stopping some of its warehouse expansions. Additionally, the company had stopped working on concepts like a robot that would deliver packages personally.

Jeff Bezos, the founder and CEO of Amazon, issued a warning last month, stating that the US economy was telling people to “batten down the hatches.”

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