17 Nov Why Are Tech Giants Laying Off So Many Employees?
Recently you may have seen a news article (or 20) that highlight the stories around layoffs in the technology sector. We’re here to address these recent happenings as well as share amazing opportunities for tech jobs!
‘Tis the season for layoffs and the current job market is seeing them at an unprecedented number. Unemployment had finally reached its pre-COVID levels during the summer months of 2022 but now there are many large tech companies that are currently laying off employees or working on large layoffs as we approach the winter months and the new year. While the tech industry still remains one of the most powerful and in-demand employment sectors in our economy, tech giants have announced massive employee layoffs. In this article you’ll find more information about these announcements, what this news means for the future of the tech industry, and why some companies may have different reasons and motives for these mass layoffs.
Why Are Tech Companies Laying Off Employees?
For the majority of these major tech companies, layoffs during the year and towards the end of the year are typically normal and are a part of their normal business process. Most of the time, these layoffs and hiring freezes are due to a financial reason. Companies like to cut spending during certain times for budgeting reasons, but there are additional factors that are forcing companies to head in this direction.
Inflation in the United States has been rising at a rapid pace after the pandemic. Add in the rising interest rates to combat that inflation, along with the other geopolitical issues that are going on in the world, and you’ve got a recipe for a serious economic disaster. It isn’t just the tech giants that are announcing major layoffs, either. Startups who had once benefited from the employment jump after the pandemic have now started to cool and are facing issues that require them to make difficult decisions about their workforce. Additionally, these startups and other cybersecurity firms have faced decreased valuations, sparking waves of laid-off employees.
Are Social Media Giants Struggling?
When news of Elon Musk buying the social media platform Twitter came to life earlier in the year, there was a number of pundits who were split on whether Musk’s purchase would be a good or a bad thing. When the sale was finally made official, the news that followed was less than ideal for thousands of employees. With other major tech companies already announcing layoffs, the news that Musk would be laying off nearly 75% of Twitter’s staff was almost unbelievable. But it only starts there.
Facebook’s parent company, Meta, announced in November that they too would eliminating a large chunk of their workforce. Not quite what Elon Musk had said he would do with Twitter, but still sizable. Mark Zuckerberg, Meta’s CEO, announced that the company would be eliminating nearly 13% of its staff, or more than 11,000 employees. This comes after Meta failed to report revenue increases for a second consecutive quarter, with another drop on the way in the fourth quarter of the fiscal year. A large reason for this is because digital advertisers are cutting back on their spending, as well as suffering from Apple’s new iOS privacy update that limits ad targeting.
Another social media company, Snap (Snapchat), also announced they were handing out pink slips to 20% of their workforce, which equated to over 1,000 employees. They had lost nearly 80% of their valuation just this year. Before Twitter was bought by Musk, they were losing nearly $200 million annually with advertising being its main source of income.
Are Elon’s Actions with Twitter About Business or Theatrics?
We all know Elon Musk is not someone who will hold back his thoughts, so when the tech giant head of Tesla and SpaceX made the announcement that he was buying the social media platform Twitter, people weren’t sure whether he was serious or not. After a dramatic summer where Musk attempted to pull out of the $44 billion sale, it had appeared he wasn’t going to own Twitter after all, but the company’s decision makers turned around and sued Musk for attempting to back out, all but forcing him to go through with the purchase. His first move as the new owner of Twitter? Firing the majority of the senior executive leadership team including the CEO, CFO, CLO, and general counsel.
This move was seen as a retaliation move by many to combat the trial that was about to start. Then came the news of the layoffs, which saw over 3,000 in-person employees and other remote employees get terminated. This was also seen by some not as a business move, but rather as a power move for the new owner and the advertisers that were spending their money to promote on the platform began pausing or cancelling their relationship altogether. Musk then introduced “Twitter Blue”, which was advertised as a monthly subscription service where users could pay $8 a month to be verified on the site, something that was previously only available to celebrities, athletes, journalists, or other people of importance. This was meant to be a way for the company to generate income outside of their normal means. However, due to rogue accounts who took advantage of this and impersonated celebrities or companies, the program lasted roughly 24 hours.
It could be said that Musk’s dramatic takeover of the company was all for theatrics, but the truth is that these layoffs will affect thousands of people and while other companies have their reasons for laying off valuable employees, Elon’s way of going about it has caused quite a storm of potential harm and lawsuits.
Several Companies in the Tech Sector Announce Layoffs
While the layoffs at Twitter, Meta, and other social media companies have been announced, there are a number of other companies within the tech sector that have made sizable layoffs. Here are a few of them:
The e-commerce and tech giant based out of Seattle recently announced that they would be laying off nearly 10,000 employees just before the crucial holiday months when most companies are hiring, according to the New York Times. Employees from the devices division, retail division, and human resources will be affected. This comes as a huge shock to many because of Amazon’s extremely successful business model. The company is naming the current economic conditions and history of rapid hiring as causes for the layoffs.
Coinbase, the San Francisco based crypto company, has announced layoffs of over 1,100 employees. This news comes as the cryptocurrency market has all but crashed and numerous crypto companies have begun the process of filing for bankruptcy.
Business software giant Salesforce announced that they were cutting hundreds of employees, but it ended up being around 1,000 employees that were ultimately let go. A drop in demand from some countries and industries is the main cause for the layoffs, according to the company.
Other Big Layoffs
- Peloton – 4,000+
- Microsoft – 1,000
- Twilio – 800
- Netflix – 480
- Groupon – 500
- Robinhood – 1,000+
- Redfin – 1,300+
- Sema4 – 750
- Tesla – 229
Scion Technical Can Match You with Available Roles in the Tech Sector
Although this news is dominating the media right now, there are multitudes of amazing technology, IT and engineering companies and startups looking for talent. For job seekers and hiring managers looking for their next match, we have good news! Our candidates and clients are some of the best in the nation and we would be thrilled to connect you with your next match. At Scion Technical we provide an efficient and effective recruitment partnership with technology corporations. Our extensive national recruitment team has connections to an extensive national talent pool, which we strategically use to connect organizations with top web developers. Contact us today to get started or visit our website to view our open positions!