US tech layoffs increase as the world faces a severe recession

The global recession followed by surging inflation has caused layoffs in many prominent tech firms around the globe.

Layoffs have enhanced significantly over the last few days in the major companies, including Stripe, Lyft, and Opendoor, handing in pink slips to the workers. 

On the other hand, many big companies, including Amazon, have frozen the hiring processes.

The past couple of months visualized many tech firms such as Apple, Microsoft and Uber have halted the hiring process or handed in resignation letters to the workforce as a cost-cutting process and to maintain positive operating margins.

The burden has surged by the low earning revenues, declining advertising revenues, and tapered guidance figures, which have caused a decrease in the companies’ stock prices.

Here is the list of the tech companies that have announced layoffs in the past few days:

1. Lyft:

Lyft Inc mentioned on Thursday that it would let go of 13 percent of its workforce, or about 683 employees, in an attempt to control the costs to cope with the weakening economy.

The latest decision announced by the company plans to yield a charge between 27 million USD and 32 million USD in the fourth quarter.

Previously, the company has slowed down the hiring process and announced job cuts of 60 employees this year.

Furthermore, the company has ensured that the layoffs would not alter the previously issued forecast for the revenue for the period.

It expects revenue of 1.04 billion USD to 1.06 billion USD and an adjusted core profit of 55 million USD to 65 million USD.

Lyft has mentioned in a statement that the announced reduction in force is an active measure as part of the company’s annual planning. 

The layoffs can be attributed to the Labour Department Proposal which planned to limit the use of independent contractors that could enhance the costs.

2. Stripe:

Stripe, one of the Silicon valley payment giants has let go of 14 percent of its total staff. The CEO of the company has mentioned that inflation, including the higher interest rates and low startup funding, has compelled Stripe to cut costs.

Collison has even alleged that the company’s management problems were mismatched as the company ‘overhired’ the employees during the pandemic and was ‘too confident’ regarding the near-term growth of the e-commerce platform. 

During last month, Stripe comprised more than 8000 employees, and the recent layoffs have brought the headcount to less than 7000 employees, the same staff size which was visualized in February 2022. 

Some departments in the company have experienced more massive sacking compared to others including the Recruitment department.

To compensate the layoffs, Stripe is offering fourteen weeks of severance pay and one full-year bonus along with the cash equivalent to six months of existing health premiums. 

The former employees have accused Stripe has planned layoffs since the beginning and targeted the low performers initially. But, the economic condition has worsened and the layoffs would be targeted at the employee’s performance as well as job functions and businesses.

3. Opendoor:

Opendoor is a property-selling platform that is currently laying off about 550 employees. It is one of the most challenging real estate markets in forty years and the company has to manage its businesses.

Opendoor has already decreased the strength of its workforce by more than 830 employees.

The company was backed by the Softbank Group which went public via a reverse merger with SPAC in 2020.

The stocks of the company have fallen more than 80 percent this year.

4. Chime:

It is one of the largest fintech firms and has recently announced that it has laid off around 12 percent of its employees comprising 1300 workers. As far, as the company has let go of 630 employees. However, they are still hiring for certain positions.

The company has experienced rapid growth during the pandemic and has reached millions of users and reached a valuation of 25 billion USD over a year ago.

The firm is centered on millennials who make 35000 USD to 70000 USD every year. But, these people are likely to be frustrated by higher fees and can no longer maintain higher balances.

Forbes has previously reported that Chime has slowed down its entry into the public listings due to inflation and the surging interest rates that are inclining towards the fear of global recession.

5. Amazon:

Amazon has previously announced that the company will slow down the hiring process as the e-commerce firm deals with the harsh macroeconomic environment.

The firm has already started slowing down hiring in some of its businesses in recent weeks but plans to continue with the hiring processes in the next year.

It has not yet decided to reduce its headcount as of now.

The human resource executive has mentioned that the company has anticipated keeping the hiring process controlled for months and monitoring what is taking place in the economy to adjust the decisions.

Edited by Prakriti Arora