The most important takeaways
- PayPal, HubSpot, and Workday all made announcements at the same time about job losses of more than 3,500.
- Mass layoffs in tech are discussed as a way to deal with the possibility of a recession as well as hiring during the pandemic.
- There are some who are beginning to wonder whether this could be the turning point for Big Tech’s reputation as a place to work for lucrative jobs with lots of complimentary perks.
Tech workers don’t get any respite in the present. The mass layoffs are continuing, with PayPal, HubSpot, and Workday all announcing cuts to the number of employees on the 31st of January.
It’s not a good week in a string of mass layoffs within Big Tech. The recession hasn’t left any company in the sector unharmed, especially following the explosion in the spread of the pandemic.
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What are the most recent layoffs?
This week’s most significant companies that have reduced their workforce, all for the same reason: the economic downturn.
The online payments were enormous.PayPal was the largest hitter in the first week of this week, with 77% of the employees losing their job. It is estimated that around 2,000 full-time employees are affected.
Chairman and President Dan Schulman said in an announcement that “We will continue to evolve as the world around us, our customers, and our business landscape change” and that PayPal employees must show “compassion towards one another.”
No other information was given about whether the job loss was caused by hiring too many people during the epidemic.
Software firm HubSpot has also announced plans to reduce 7 percent of its workforce, which is roughly 500 employees. The company’s CEO, Tamini Rangan, said in a company email that HubSpot has “experienced more rapid deceleration than we anticipated” and also tweeted that he was grateful to the workers who have been laid off.
Rangan was following the Zuckerberg strategy, citing the over-hiring in the early days of the pandemic to deal with an unprecedented increase in business. “The amount of un-certainty that exists in the competition of consumers now tells us that we could face further challenges ahead,” he continued.
Another move HubSpot is making is to consolidate its office space through 2023 to ensure it will have “higher density” within its areas. This has been a problem for many businesses as offices are bare while employees work from home.
Workday, a cloud software firm, plans to shrink its workforce worldwide by three percent, which amounts to 525 employees. The co-CEOs, Aneel Bhusri and Carl Eschenbach, said in an email to employees that “we remain within a global environment that poses challenges for businesses of any size.”
This company was estimated to have over 17500 employees worldwide in October of last year, a 15% increase over the previous year.Bhusri and Eschenbach stressed in their blog post that “these changes are not caused by hiring too many employees,” and they’ll continue to hire throughout the entire year.
Are tech layoffs slowing?
Unfortunately, it doesn’t appear as if we’re ever finished with massive job cuts in the tech sector.
According to the layoffs in Tech Tracker, six additional firms announced plans to reduce their workforces at the exact same time. This is the total number of employees laid off on January 31st.
IBM was in the news last week when it announced that 1.5 percent, or 3,900 jobs, would be removed. The computing giant said that the decision was due to it selling its Healthcare Data Analytics division and establishing its IT management division, Kyndryl, as its own business.
We’ve all heard of the biggest cuts as well. The massive round of job losses at Microsoft, Google, Amazon, and Meta total 51,000 in one instance.Many people believe that the big tech companies are just getting started, with staff cuts and Meta reportedly keeping an eye on middle management employees in the company.
The number of laid-off employees for 2023 alone will be close to 83,000, and we’re just entering the second half of the year.
Is Big Tech in jeopardy?
The main reason the layoffs are taking place is because tech companies have experienced an extremely prosperous couple of years, which has led many to believe that it’s a correction rather than a bubble burst.
Following the pandemic, many tech companies saw an increase in demand for their services, which fundamentally changed the way we operate today.Amazon’s corporate workforce will have doubled from 2019 to 2022, and Meta’s workforce will have nearly doubled within two years.The CEO of Meta, Mark Zuckerberg, made reference to reducing fat in his announcement of layoffs.
It’s not just this; tech companies are still hiring. CompTIA research found that during December, technology companies added 17,600 employees to their payrolls, making it an unprecedented 25th consecutive month with net job growth.
Of the 246,000 job ads that are still being posted in the tech sector, almost a third of them are for engineers and software developers. Research chief Tim Herbert noted, “Despite the cuts, there will always be more companies hiring tech talent than eliminating it.”
What’s the problem?
Others have concluded that these mass layoffs are the beginning of Big Tech losing its shine.
The best talent was attracted to these organisations like a moth to the flame of a fire, thanks to huge pay packages and many office perks. Now that leaner times have arrived, the free dinners, massage therapists, and on-demand sushi bars will get the axe. The perks had to go.
The former Big Tech employees have despaired over the way they learned that they’ve been let go. At Google, whole teams lost access to internal work systems before they would even read the email saying they were fired.
Others claimed that the layoffs were arbitrarily imposed without regard to actual performance. It’s not easy to be told that you’re worthless and to be a victim of Big Tech, which leaves workers with a feeling of unfairness.
Many of these laid-off employees have decided to start their own company. Based on the EIG, nearly 1.7 million startups have filed for business this year, which is a nearly 28% rise from the pre-pandemic level. This is good for the entrepreneurship culture within the US and negative for Big Tech’s “hustle culture.”
A combination of fewer benefits and the sloppy treatment of layoffs could result in Big Tech struggling to recruit. They’re looking suspiciously similar to other desk jobs at a corporate office and have the same high standards for employees.
It’s possible that we’ll see another upswing in employment when the downturn in the economy has slowed down. However, the people who have been affected will quickly forget the way Big Tech treated them.
The odds are that technology will likely be down but not out. There is still plenty of money to be made in this sector, so it is unlikely to be in decline for long; however, this does not rule out the possibility of disruptive new players and changes to the company hierarchy.
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