The peppy ‘A typical day at Google’ is no longer a video trend. Nicole Tsai, a former programme manager at the LA office, was one among those who earned fame by displaying their fancy workplace on social media. But, it was short lived.
Then came the layoff. Her enviable vlogs, which previously showcased Google’s themed rooms, free meals and a speakeasy bar, led people to believe that the tech giant coddles its employees. However, on the one hand, the recent spate of layoffs, which might be devastating for many and life altering for others, is the hard reality right now. On the other hand, the firings do happen to be one of the more pragmatic solutions to the economic crisis and result in a positive long-term impact on the companies.
For instance, Sundar Pichai, CEO at Google (who is set to take a huge pay cut amid the layoffs), emphasized that the cuts were the product of careful consideration. Bernstein analyst Mark Shmulik, highlighting the ‘cushy perks’, said people working at Google are keeping their heads down and hoping that cutting toro from the sushi bar is the only cut that affects them.
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This is not the first time employee perks were trimmed across the industry. Meanwhile, Apple seems to be the only steady contender right now that has so far evaded the game of pink slips. The last fat round of layoffs at the iPhone maker happened way back in 1997, when co-founder Steve Jobs returned to the company and fired 4,100 employees to cut costs and invest in R&D. The result: It kept in good shape during the 2001–2003 recession and introduced the iTunes music store and software in 2003. This was quickly followed by the iPod Mini and the iPod Photo in 2004, setting off a period of rapid growth for the company. Hence, history shows layoffs can impact tech companies in hidden manners.
Read: What Keeps Apple Buoyant in Rough Tides
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Bleak bright reality
If you look at the ongoing recession, it suggests that the industry is well-harnessed to avoid the economic dent. In a survey by Ernst & Young (EY), 61% of the 250 tech leaders believed that “a potential recession will have a positive impact on their organization”. Moreover, half of the tech leaders said they already have plans to activate new growth plans “within the next two years or sooner.”
A notable example would be how IBM got its lucky break during the Great Depression of 1929 and became a tech giant. The company spent today’s equivalent of $17 million to open a brand new research facility during the unstable economy and was economically well-received a few years later.
Tens of thousands of people being fired sounds overwhelming, but when you put it in context, the figures still are minuscule with over 165 million people still in the workforce. It’s also important to remember that some of these totals are not too many in the grand scheme of things. Plus, historically, the best deals are made in downturns.
An analysis by Bain using data from the Great Recession reinforced that finding. The top 10% of companies in Bain’s analysis saw their earnings climb steadily throughout the period and rise afterwards. Another study by McKinsey found similar results.
Vacant tech jobs
Despite industry-wide redundancy, there are over 375,000 vacant tech jobs in the US, according to a new report from tech insights firm Dice. That would mean 4X as many job openings as the layoffs recorded in 2023.
There’s more data to corroborate that. As per Revelio Labs, 70% of laid off US tech sector employees since March 2022 have been able to find a job within three months of being unemployed. That number has been steadily climbing — in October, 75% of laid-off workers found a new job within the said period.
George Penn, managing VP of research at Gartner, perceives the current scenario as a “great stabilization” in the broader economy: Businesses freeze their hiring intentions and take down job openings. Job-seekers get less picky. Plus, HR won’t have to fight over talent with sky-high salaries or signing bonuses, he opined.
“It’s a standoff,” another expert believes, calling the market state an inflection point. There’s a healthier equilibrium between the employer and the employees as both parties are listening, stated Paige Scott, senior partner at the executive search firm Kingsley Gate Partners.
Ultimately, tech layoffs should be the last resort to consider and must be dealt with sensitively through effective communication. Unlike the current state of affairs where companies are brutally axing employees amid work calls and over emails. Experts advise companies to chalk out recession-proof strategies as the ongoing disturbing trend might only be the tip of the iceberg.