In January 2021, Microsoft CEO Satya Nadella spoke loftily about how the first year of the pandemic had sparked a stunning shift to online services and, in the process, made his The company benefits. “What we’ve witnessed in the past year is the dawn of a second wave of digital transformation sweeping through every company and every industry,” he said.
Two years later, the situation looks even more dire. This week, Microsoft said it plans to lay off 10,000 workers as companies rethink digital spending during the pandemic and face broader economic uncertainty. Microsoft customers are now trying to “do more with less,” Nadella said.
Microsoft isn’t the only company undergoing such a dramatic turnaround.A few days later, Google Parents Company Alphabet followed suit, saying it planned to cut about 12,000 jobs, or more than 6% of its workforce.
In the past three months, Amazon, Google, Microsoft, and Facebook parent Meta have announced plans to cut more than 50,000 workers from their collective ranks, in a stunning reversal In the early days of the pandemic, the tech giants were growing rapidly to meet the surging demand of countless families living, shopping and working online. At the time, many technology leaders seemed to expect this growth to continue unabated.
By September 2022, Amazon (AMZN) has more than doubled its corporate workforce, hired more than half a million additional workers, and significantly expanded its warehouse footprint compared to the same month in 2019. Between March 2020 and last September, Meta’s headcount nearly doubled. Microsoft (MSFT) and Google (GOOGL GOOGLE) have also hired thousands of additional workers, and other tech companies such as Salesforce (CRM), Snap (SNAP) and Twitter have announced layoffs in recent weeks.
But many of these leaders appear to have misjudged how much the pandemic-stimulated growth will last once people return to offline life.
Rising interest rates, inflation and recession fears have reduced advertising and consumer spending, all of which have weighed on technology companies’ profits and stock prices in recent months. Wall Street analysts now expect Google, Microsoft and Amazon to report single-digit revenue growth in the crucial December quarter, while Meta and Apple will report declines when they report earnings in the coming weeks, according to Refinitiv estimates.
For the most part, the recent layoffs represent a relatively small percentage of each company’s total headcount, essentially wiping out some companies’ gains last year but leaving tens or even hundreds of thousands of remaining employees. But it still upended the lives of many workers, who are now forced to find new jobs after their employers ended a period of seemingly limitless growth.
“They went from being on top of the world to having to make some really tough decisions,” said Scott Kessler, global head of technology, media and telecommunications at investment firm Third Bridge. “To see this dramatic reversal of fortune…not only Just the magnitude of those moves, and the speed with which they come into play. You’ve seen companies make the wrong strategic decisions at the wrong time.”
Apple (AAPL) remains an outlier as a major tech company that hasn’t announced job cuts, though the iPhone maker has reportedly frozen hiring in all areas except research and development. From 2019 to last year, Apple (AAPL) increased its headcount by 20%, significantly lower than some of its peers.
“They took a seemingly more thoughtful approach to recruiting and overall management of the company,” Kessler said.
Tech chief executives, from Meta’s Mark Zuckerberg to Salesforce’s Marc Benioff, have accused themselves of overhiring early in the pandemic and misreading what happened once the Covid-19 crisis hit. 19 as restrictions ease and how the surge in demand for its products will cool. On Friday, Pichai also blamed Alphabet’s layoffs and said he planned to refocus the company on its core business and “top priorities.”
“The fact that these changes will impact the lives of Google employees weighs heavily on me, and I take full responsibility for the decisions that brought us here,” Pichai said in an email to employees posted on the company’s website on Friday. said in.
It’s worth noting, however, that none of the CEOs of major tech companies Now the supervisory cuts appear to be hit by any changes to their pay or titles.
Kessler said tech layoff announcements could continue into the upcoming earnings season amid ongoing economic warning signs. Even companies that may not yet be feeling the pain may follow their peers’ lead in layoffs.
“I think there is an element [some companies saying]’We may not see that now, but all the other big companies, these companies that compete with us, that we know, that we respect, are taking these actions, so maybe we should think and act accordingly,” Kessler said .