Over one million workers have been let go by Silicon Valley’s major tech companies, including Google, Microsoft, Amazon, Meta, Twitter, Salesforce, Cisco, Snap, and others, in the previous several months, and many people anticipate there will be more.
However, why are the top tech businesses in the world laying off workers, and how many more jobs will be affected.
COVID INCREASED HIRING?
As a result of the COVID-19 epidemic, IT corporations have increased their employee counts because the demand for their products has grown significantly while the world was on lockdown.
For instance, in order to accommodate more users during the epidemic, Google quickly modified its video conferencing service, Google Meet. Meta also quickly modified WhatsApp’s video conferencing service. Companies continued to expand their workforces as a result of the need for experienced workers such as product managers, developers, UI/UX designers, and others to handle the rapid changes. Companies are attempting to cut their workforce in order to keep up with the times because since that time, the products have developed and drastic adjustments are not currently necessary.
SUNDHAR PICHAI’S PERSPECTIVE ON LAYOFFS
In the letter he delivered to staff after announcing the firing of 12,000 people, Sundar Pichai made reference to this. “Over the past two years, there have been times of spectacular growth,” he remarked. We hired for a different economic reality than the one we currently face in order to meet and fuel that development.
INVESTORS’ PRESSURE
Fund managers and early investors are putting pressure on big internet companies like Google, Meta, Amazon, Twitter, and others to make quick decisions in order to overcome the companies’ slowing growth.
Brad Gerstner, chair and CEO of Altimeter Capital, wrote to Meta’s founder and CEO Mark Zuckerberg in October last year to propose staff layoffs and operational restructuring.
According to the letter, Meta has “drifted into the region of excess” due to having “too many people, too many ideas, and too little urgency.” When growth is quick and easy, this lack of focus and fitness is hidden, but it becomes fatal when growth slows and technology advances.
NEW INVESTMENTS WITH NEGATIVE CASH FLOWS
Silicon Valley’s big giants have launched a number of new investment projects that have been unsuccessful. The robotics branch of Amazon, AltspaceVR, the virtual reality and metaverse division of Microsoft, and Bulletin, a competitor to Meta’s Substack, are all, in some ways, futuristic sectors that required significant expenditures yet quickly burned through the money. Companies have also been attempting to reduce costs due to the cash burn.
WILL THE LAYOFFS INCREASE?
According to experts, there will likely be more layoffs in the future, particularly given the current economic climate.
Big Tech has been enjoying itself up to this point, but it is obvious that they will experience major cost and headcount reductions. Time will get difficult during the following six to nine months, I believe, as the recession approaches. Although I believe this dark storm will pass, you cannot consider these IT businesses unaffected by it. They’ll also have a huge rip in them, in my opinion.
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