The significant downsizing of amazon and other big tech is reinforcing the notion that the bull market years of the previous decade, which made these tech firms trillion-dollar companies and created numerous job opportunities worldwide, are currently coming to an end.
For some of the largest tech companies in the world, it’s crunch time. A few months ago, these companies, including Meta and Twitter, were a source of high salaries and enviable employee benefits and perks. Now, they’ve let go of tens of thousands of workers worldwide. Up to 10,000 employees in “corporate and technology” are reportedly getting pink slips from Amazon, and Apple, the most valuable company in the world, has announced a slowdown in hiring.
The significant downsizing is reinforcing the notion that the bull market years of the previous decade, which made these tech firms trillion-dollar companies and created numerous job opportunities worldwide, are currently coming to an end. It also makes people worried about what might happen to the economy as a whole as a potential recession looms large.
Big Tech firms are actively cutting staff.
Both Twitter and Facebook’s parent company Meta have laid off double-digit percentages of their workforce. Additionally, their choice has had an impact on Indian employees, most noticeably in Twitter’s case.
Over 11,000 employees were affected by Meta’s 13% global workforce reduction last week. The impact has been minimal in India, at least so far; according to sources, only 20–30 people who worked for Meta in marketing and engineering roles nationwide have received pink slips. An immediate request for comment from Meta was not met with a response.
After Elon Musk, the richest man in the world who took control of the microblogging platform, Twitter went on an erratic mass layoff spree and has now let go of 50% of its 7,500-person workforce. After the downsizing, only 18–20 people are said to be left in India. 250–300 people worked for Twitter India prior to Musk’s rule.
Given the arbitrary manner in which employees have been asked to leave the company since Musk’s takeover, even the few remaining employees are unsure of their futures there. Twitter did not respond to inquiries until after the article was published, but it is important to note that almost the entire communications team at Twitter India has been fired.
According to the US-based publication Platformer, Twitter also terminated a sizable number of contract workers on Saturday (November 12) and affecting more than 4,000 workers.
As it prepares for slower growth and a potential recession, Amazon plans to let go of close to 10,000 employees, the largest headcount reduction in the company’s history, according to The New York Times.
The Amazon devices group, which is in charge of the Echo smart speakers and also Alexa digital assistant, as well as also Amazon’s retail divisions and human resources, are likely targets of the layoffs, which could start as early as this week. There is currently no information available regarding how Amazon’s downsizing will affect its Indian employees. An immediate request for comment from a company spokesperson was not met with a response.
Apple CEO Tim Cook stated earlier this month that the company was also being very “deliberate” in its hiring and that it was only adding new employees to specific departments. Alphabet, the company that owns Google, has also reduced hiring.
The catalyst for the widespread layoffs
It is impossible to single out one cause for the widespread layoffs, even though there are some overarching factors that have hurt these companies, such as rising inflation and the return to the offline world following the Covid-19 pandemic where companies overestimated and over-invested in the online world.
Musk acquired Twitter at an inflated price, took the company private, and is now under pressure to turn a profit at the business, which is why there were layoffs at Twitter. He initially invested in Twitter at a price of $33.03 per share, and when he ultimately closed the deal, he paid $54.20 per share, for a total of $44 billion.
Even though Twitter is no longer a publicly traded company, private equity investors will still hold it accountable. After Musk, Saudi Arabia’s Prince Alwaleed bin Talal bin Abdulaziz is now Twitter’s second-largest investor. Changpeng Zhao, another investor who is also the CEO and founder of the bitcoin company Binance, has previously stated his support for layoffs.
Mark Zuckerberg, the CEO of Meta, asserted that the company’s 13% staff reduction is a course correction after it went on a hiring binge during the online retail boom that followed the pandemic. “Online sales have not only resumed their previous patterns, but our revenue has been much lower than I had anticipated due to the macroeconomic downturn, increased competition, and ad signal loss. He admitted his error in a blog post announcing the layoffs. “I got this wrong, and also I take responsibility for that,” he wrote.
Apple’s changes to its privacy policies were also a major blow to Meta, a company that was heavily dependent on advertising for its income. When it released its quarterly earnings in the last week of October, the share price of the current company dropped by more than 20%.
Amazon cutting jobs is a sign that consumer confidence is low and particularly in the weeks leading up to the holiday shopping season, which is typically the best time of the year for e-commerce.
Apple, one of the few businesses still reporting record-breaking earnings and beating estimates, has blamed the economy for its own slowdown in hiring.
Only a few days after Twitter announced its mass layoff, in which half of its staff was let go, Meta did the same. Mark Zuckerberg, the founder of the company, announced that he must fire 13% of his staff, or more than 11,000 people and after realizing that his decision to mainly increase investments did not turn out as he had hoped.
Disney and Amazon have previously traveled down the same road, before the shock subsided. Disney has outlined its plan to also review spending at all divisions, cut costs, and also freeze hiring after its quarterly earnings plunged to an enormous $1.5 billion loss, while Amazon has decided to lay off thousands of workers to reduce losses.
The fact remains that these large MNCs also took the risk of growing too quickly, despite industry experts’ predictions that the doom will change once the economic situation improves.
Who all fired their employees?
Many other tech behemoths joined Twitter and Meta in going on hiring binges. The Kobeissi Letter, a website that conducts weekly analysis of international capital markets, claims that this is the largest wave of the layoffs in the technology industry since 2001.
Companies like Intel (20%), Snapchat (20%), Lyft (13%) and US-based video-sharing website Cameo (25%) have also turned to firing employees in place of hiring freezes, joining Apple.
The ed-tech behemoth Byju’s fired 1,100 employees earlier this year, including in India.
According to data from Trueup Tech, a tech layoff tracker, there have been 1149 layoffs at tech companies so far in 2022, affecting 183,832 people.
What led to this?
The majority of businesses explain the layoffs as being a result of the Covid crisis. In Zuckerberg’s words, “When Covid first launched, the world was moving quickly online, and the e-commerce boom caused an astronomical increase in revenue. Many people believed that this acceleration would last forever and carry on even after the pandemic was over. I decided to significantly increase our current investments because I felt the same way. Sadly, things did not turn out the way I had anticipated.”
In addition, he said in a public statement that, with a few exceptions, he was extending our hiring moratorium through Q1.
As Zuckerberg admitted, most businesses, like Meta, took pleasure in the initial boom and hoped the trend would continue. Nobody anticipated the silence that followed the Covid wave as people started returning to their offices.
Most tech goliaths aggressively hired the best in the market for enormous pay packages as competition became fierce in the hopes that the surge would continue. Even Jack Dorsey, the creator of Twitter, admitted that the company grew too quickly and accepted blame for the current Twitter crisis.
The recession is also to blame.
Many tech giants are preparing for the impact of the recession by laying off employees and making other financial cuts as it is expected to hit hard against the backdrop of Russia’s invasion of Ukraine. The first step is to stop hiring, then come workforce reductions.
The issue has only gotten worse due to the current rise in interest rates, high fuel prices, and supply chain problems.
Contrary to expectations, it may take some time for the situation to get better. This is because of the macroeconomic effects of the trend, according to experts.
In addition, many people are still unsure of the ideal ratio between profitability and growth. This was made clear over the past few years when the big tech companies invested heavily in expansion, primarily through hiring and acquisitions, in order to balance the cash flow of their investors.
Entrepreneur Eric Rachlin told The New York Times, “The pressure is just to spend the money quickly enough so you can grow fast enough to justify the kinds of investments V.C.s want to make.
The tech sector will, however, rebound because more people are starting to invest in cutting-edge hardware and software.
edited and proofread by nikita sharma