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The tech layoffs seem to be getting out of hand for big techs. Major players, including the likes of Amazon, Google, Twitter, Microsoft, and Salesforce, have collectively let go of about 55,000 employees worldwide, that is, close to 3-6 percent of their total headcount.
Amid the fears of a global recession in 2023, many tech behemoths, including Microsoft, Spotify, Amazon, Meta, Lyft, HP, Twitter, Salesforce, and Cisco, were compelled to implement mass layoffs. Companies such as Netflix and Adobe too felt the heat of these cutbacks. While Cisco reduced its workforce by 5%, Salesforce announced plans to trim the employee count by 10%. Music streaming platform Spotify has also said that it will shed 6 percent of its workforce, that is, 588 people.
In a global restructuring effort, Twitter eliminated 7,500 positions, leaving a skeletal 20 staff members in India. Meta, too, let go of 11,000 employees. Interestingly, Apple, which is on a hiring freeze, seems to have not laid off any employees so far.
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Tech Layoffs Begin
Alphabet, the parent organisation of Google, recently implemented a 6% reduction in its global workforce, cutting 12,000 jobs. These layoffs will likely impact Alphabet and Google’s products like Google Cloud, Chrome, Search, and Android owing to macroeconomic conditions and changing customer priorities.
CEO Sundar Pichai wrote in his mail, “Over the past two years, we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today.”
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(A snapshot of an email sent by Alphabet chief Sundar Pichai amid the layoffs)
In a move that mimics the actions of many other tech giants, Microsoft CEO Satya Nadella announced the decision to lay off a total of 10,000 employees, that is, 5 percent of its workforce dominating the HoloLens, engineering, HR, advertising and marketing space by Q3 2023. The company cited a need to refocus on key areas such as artificial intelligence amid economic uncertainty as the reason for the layoffs.
However, the layoffs have raised eyebrows, as the entire team behind the virtual reality platform AltspaceVR and the Mixed Reality Tool Kit have been fired. This raises questions about the future of Microsoft’s HoloLens technology, which is already facing challenges in maintaining its military contract with the US government.
Although the company has several lucrative bets in hand, like $10 billion in AI research lab OpenAI, it reported the slowest growth in the last quarter with $50.1 revenue (11 percent increase). Despite this, the company’s growth has slowed in recent quarters, with revenue increasing by just 11 percent in the last quarter. In addition, the news of the layoffs sent Microsoft’s stock price down by 2 percent, which has seen a 22 percent decline over the past year. However, the company’s performance is still stronger than many of its peers in the tech industry.
(A snapshot of the email sent by Satya Nadella to his employees, addressing the recent layoffs)
As the calendar flipped to 2023, e-commerce giant Amazon too announced a significant shift in its workforce strategy, revealing plans to terminate 18,000 positions – a staggering 80 percent increase from the previously disclosed 10,000 job cuts. The decision was made in response to the mounting inflationary pressures and ovehiring during the pandemic. This marks the largest round of recent layoffs for any technology company. The impact of these cuts will be felt across the organisation, with an estimated 3 percent of corporate employees set to lose their jobs. A majority of the layoffs will occur within Amazon Stores and PXT departments.
Apple’s Immunity to Layoffs
Interestingly, the only tech giant to have announced zero layoffs is Apple. While other companies were doubling and tripling their workforce amid the pandemic, Apple stayed afloat and played it strategically.
Between 2020 and 2022, the company made prudent hiring decisions, resulting in a workforce growth of 20 percent to approximately 164,000 employees, a 6.5 percent increase from the previous year. In comparison, rival companies such as Amazon, Microsoft, Google, and Meta saw significant increases in their employee count, resulting in overhiring. During this period, Amazon doubled its workforce, while Microsoft grew by 53 percent, Google swelled by 57 percent, and Meta saw an insane growth of 94 percent.
In June 2022, Microsoft’s workforce bulked up to 221,000 employees, a significant leap of 40,000 from the previous year. This followed a steady upward trend, with a notable 11 percent increase in the number of employees added the year prior. Likewise, Amazon saw a substantial 38 percent growth in its workforce, adding 310,000 jobs in 2021. Google and Meta also went on a hiring spree, with Meta bringing in 13,000 new employees and Google adding 21,000 workers in 2021.
Simply put, Apple did not overhire. It added employees much slower than its peers, who went for aggressive expansion during the pandemic. Apple’s hiring approach is in line with its tendency to operate with a lean workforce and focus on hardware products and sales, which have largely been insulated from the economic downturn. The company has not undergone significant mass layoffs since 1997, when co-founder Steve Jobs returned and decided to cut 4,100 employees to manage expenses.
As the company prepares to report its first quarterly sales decline in over three years in February, it is also moving forward with its augmented-reality headset and car project, albeit at a more measured pace.
Although Apple did not cut jobs, its subsidiary Intrinsic, specialising in robot software, announced an impending shedding of 40 employees, reducing 20 percent of its workforce. Verily, its life sciences division, has scaled back its operations by 15 percent, resulting in a loss of 240 jobs.
Who is to blame?
Companies such as Google, Uber, Tesla, and Amazon were forced to cut costs by laying off thousands of workers, including high-skilled and expensive employees. Over 1,000 tech companies in total fired more than 150,000 workers.
As the world was thrown into chaos by the pandemic, technology giants scrambled to meet the surging demand for their products and services. In their haste, they overhired, bringing on more employees than they truly needed. Now, as the economy struggles and demand for their products wanes, these same companies are laying off employees.
But who is to blame for this season of layoffs? Is it the leaders who made the hasty hiring decisions or the employees who are now paying the price for those mistakes?