‘RightSizing’ Is The New Buzz Word In 2024, Even As Google, Amazon Others Announce Drastic Cuts; Is More ‘RightSizing’ In Order?

In 2024, the buzzword is “RightSizing,” with major tech giants like Google and Amazon making significant workforce reductions, and so far, 2024 is off to a start that looks a lot like 2023—with a week full of job cuts from tech companies.

 

As the New Year unfolds, numerous tech and startup professionals have unfortunately become unemployed due to extensive layoffs in 2023 driven by economic uncertainties.

According to Layoffs.fyi, a site tracking layoffs, 48 tech companies have let go of 7,528 employees by January 15.

These cuts indicate another challenging year for the tech industry, following the termination of over 260,000 jobs by more than 1,150 tech companies in 2023. To address financial concerns, prominent tech entities, such as Google and Amazon, plan to implement further job cuts this year.

Google – Alphabet’s Google is reducing its staff in digital assistant, hardware, and engineering teams. The company stated that ongoing organizational changes include global role eliminations.

Amazon Audible – Audible, an online audiobook and podcast service, is laying off approximately 5% of its workforce. Audible CEO Bob Carrigan noted the company’s overall health but acknowledged an increasingly challenging landscape.

Amazon Prime Video – Amazon plans to lay off several hundred employees in its streaming and studio operations. The affected staff at Prime Video and Amazon MGM Studios in the Americas will receive notifications soon.

Amazon’s Twitch – Streaming platform Twitch is cutting its workforce by 35%, or about 500 workers, following a previous layoff of over 400 employees in March 2023 due to unmet growth expectations.

Discord – Social chat and messaging startup Discord informed its employees on January 11 of a 17% staff reduction, affecting approximately 170 jobs. Founder and CEO Jason Citron conveyed this decision in an internal memo.

Unity Software- Videogame software provider Unity Software is set to cut about 25% of its workforce, amounting to 1,800 jobs, to concentrate on its core business for long-term success and profitability, as per an announcement by interim CEO Jim Whitehurst.

Xerox- IT company Xerox announced on January 3 that it will reduce its workforce by 15%, impacting approximately 3,000 employees. This move is part of a strategy to introduce a new organizational structure and operating model, with layoffs expected in the first quarter of 2024.

Frontdesk- US-based proptech company Frontdesk terminated all 200 employees, with CEO Jesse DePinto delivering the news during a brief Google Meet call. The company opted for state receivership over bankruptcy.

The Regrettable BuzzWord

Embracing the term “rightsizing” has become a notable trend, especially among executives who may find the straightforwardness of “laid off” uncomfortable. 

Hence, in these discussions, many choose to veil the harsh reality of job cuts with more opaque language.

Roger Lee, the mind behind Layoffs.fyi, remarked on the neutrality conveyed by the term “rightsizing.” 

According to him, it serves as a more neutral expression, suggesting that companies, having undergone significant hiring in recent years, are now adjusting their size in response to prevailing economic conditions.

Some instances of workforce reduction were disclosed in the peculiar and isolating realm of remote work, where employees, in their living rooms, closed their laptops, aware that they might never engage with their colleagues again.

When Wayfair, a furniture retailer, announced a 10% reduction in its workforce, equating to 1,750 employees, the company framed it as part of a broader “rightsizing” strategy. 

Similarly, in the same month, when PayPal cut 2,000 full-time roles, constituting 7% of its staff, the company cited the necessity for “rightsizing our cost structure.”

However, experts caution that the avoidance of the term “job cuts” does not alleviate the impact on employees pointing out that using euphemisms in the layoff process might be linked to “moral disengagement,” where business leaders use vague language to distance themselves from the ethical implications of their decisions. 

Despite the use of euphemisms for the workforce, the term “rightsizing” boils down to one stark reality: they have been laid off.

What’s The Trend To Be?

The recent wave of announcements about layoffs may evoke a sense of déjà vu, but experts argue that these job reductions might not signal a year as harsh as those experienced in 2022 and 2023. 

The scale of these cuts is smaller compared to the significant layoffs by industry giants such as Google, Amazon, and Meta in recent years following extensive growth. 

Hence, rather than indicating a continuous decline in tech jobs, the layoffs seem to reflect evolving priorities within companies, set against the backdrop of a stable labor market.

According to Rachel Sederberg, a senior economist at Lightcast, the tech sector appears to be in good health overall as consumer habits have stabilized post the rapid changes induced by the Covid-19 pandemic. 

Some of the latest job cuts are aimed at specific departments and products and may be seen as routine adjustments in the course of business decisions.

Sederberg notes that companies frequently make choices about their focus, and sometimes this involves job cuts. While smaller, targeted cuts may continue in the upcoming months, she does not anticipate a “contagion” of layoffs spreading across the tech industry or other sectors.

Daniel Keum, an associate professor of management at Columbia Business School, distinguishes the current situation from the sweeping rightsizing observed in 2022 and 2023. 

As companies navigate the sphere of automation and generative AI, there is a discernible rebalancing of jobs and priorities rather than a wholesale reduction in workforce. 

Despite job losses in the tech industry last year, particularly in the context of generative AI, Keum observes an ongoing increase in related job posts.

Companies like Google and Duolingo have attributed recent changes to a need for greater efficiency, realignment with product priorities, and shifts in content generation methods. Google, for instance, emphasizes responsible investment in significant opportunities ahead.

Despite significant cuts by major tech firms, the overall job market remains stable, with the US unemployment rate at 3.7 percent in December and Tech job unemployment is even lower at 2.3 percent, according to CompTIA. 

The Viewpoint

The recent spate of layoffs in the tech industry, though reminiscent of previous years, may not necessarily foretell a repeat of the severity witnessed in 2022 and 2023. 

The current job cuts appear more targeted and reflect a recalibration of priorities within companies, rather than a sweeping reduction in workforce size. 

Despite ongoing adjustments, the overall health of the tech sector seems robust, with consumer habits stabilizing post-pandemic disruptions.

Experts argue that these shifts in employment are part of the natural ebb and flow of businesses making strategic choices to remain agile and efficient. 

While Layoffs.fyi reports a significant but comparatively modest estimate of 4,500 jobs lost in 2024, the scale pales in comparison to the staggering 400,000 roles affected in the preceding years.

Moreover, the broader job market remains stable, despite challenges faced by some tech workers in securing new positions late in 2023, opportunities abound in other sectors such as government, manufacturing, and agriculture. Notably, some individuals have viewed these shifts as opportunities to venture into entrepreneurship, founding their own startups.

The Last Bit, Hence, while the tech industry undergoes notable changes, the overall outlook suggests a nuanced and evolving shift rather than a bleak repetition of the challenges witnessed in recent memory. 

As technology continues to shape and reshape the business environment, adaptability and strategic realignment remain crucial, offering avenues for growth and innovation amid the ever-changing dynamics of the industry.