The first sign of job cuts at Amazon came from LinkedIn posts of laid-off employees.
Then the company’s device division executive Dave Limp announced, “It’s painful for me… but we will lose talented employees in devices and services.”
Across the tech industry, at companies like Twitter, Meta (parent company of Facebook), Coinbase and Snap, workers have been announcing that they are “looking for new opportunities”.
Worldwide, including Brazil, more than 120,000 employees have been laid off according to the Layoffs.fyi website, which tracks technology cuts.
Different companies have laid off for different reasons, but there are some common factors.
As many things moved online during the pandemic, the tech giants’ businesses boomed and executives believed the good times — for them — would continue.
Meta, for example, hired more than 15,000 people in the first nine months of this year.
Now, executives announcing cuts say they “miscalculated.”
“I made the decision to significantly increase our investments. Unfortunately, things did not turn out the way I had hoped,” said Mark Zuckerberg, Meta’s chief executive, as he laid off 13% of the company’s employees.
Market changes
Online advertising is the main source of revenue for many technology companies, but the outlook is for tough times ahead for the advertising market.
Companies are facing increasing opposition to invasive advertising practices.
Apple, for example, has made it difficult to track people’s online activity and sell that data to advertisers.
Furthermore, as the economy struggles, many companies have reduced their online advertising budgets.
In the financial technology sector, rising interest rates to contain rising global inflation also hit businesses.
“It’s been a really disappointing quarter for earnings for many of the big tech companies,” says PP Foresight analyst Paolo Pescatore. “Nobody is immune.”
Even Apple has signaled caution, with chief executive Tim Cook saying the company is “still hiring” but “in a cautious way”.
Amazon attributed its layoffs to an “unusual and uncertain macroeconomic environment” that has forced the company to prioritize what matters most to customers.
“As part of our annual operational planning review process, we always look at each of our businesses and what we believe we need to change,” said spokeswoman Kelly Nantel.
“As we go through this, given the current macroeconomic environment (as well as several years of rapid hiring), some teams are making adjustments, which in some cases means that certain roles are no longer needed. We do not take these decisions lightly and are working to support all employees who may be affected.”
cut the swelling
Investors also increased pressure to cut costs, accusing companies of being bloated and slow to respond to signs of a slowdown.
In an open letter to Alphabet, parent company of Google and YouTube, British investor Christopher Hohn urged the company to cut jobs and wages.
Alphabet needed to be more disciplined about costs, he wrote, and cut losses on projects like Waymo, his self-driving car company.
Elon Musk certainly believes there is room to cut costs at his latest investment, Twitter, which has struggled to turn a profit and attract new users.
Furthermore, many analysts argue that Musk overpaid the company and there is pressure to make the investment worthwhile.
The billionaire laid off half of the company’s approximately 7,500 employees. And for those who remained, the workload just got a lot bigger.
According to US media reports on Tuesday (15), Musk told employees they needed to commit to a culture of “long hours, high-intensity work” or leave the company.
On Thursday (18), after reports that more than 1,000 workers had opted out of Twitter, network employees were told abruptly that the company’s offices would be closed until Sunday, but the reason for this is unclear.
end of the good times
Analyst Scott Kessler says there is less tolerance for big spending on high-tech bets like virtual reality or autonomous vehicles, which may not pay off in the short term.
Investors also find the high salaries and perks that some in the industry enjoy unsustainable.
“Some companies have had to face harsh realities,” he says.
Mike Morini of WorkForce Software, which provides digital management tools, says the moment looks like a tipping point.
“The technology industry is coming out of a period of growth at all costs,” he says.
But while the big tech companies may be having a tough time, they’re not broke.
Amazon’s proposed 10,000 layoffs in corporate and technology roles — its biggest job cuts yet = — represent just 3% of its management staff.
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