Here are some of the major cuts in the tech industry so far. All numbers are approximations based on filings, public statements and media reports.
Many of the listed companies have experienced – and are experiencing – insane growth and financial success.
So what say ye for the next Christmas purchasing season?
Layoffs are hard, and none of us (except who own their business) are guaranteed we will have a job tomorrow. (Those of you in the EU, might, but then it is just a longer process).
That being said, there are different levels to these events.
I think Twitter was the worst, with terrible ultimatums, and dismissing more than half their workforce. And then trying to weasel out of promised severance payments. (all these according to public rumors, of course I don’t have insider information)
IBM close second. Moving the jobs to India (relocate to a new country, or lose your job).
Microsoft is somewhere above average. I think they promised good severance, six months of health insurance, and more importantly stock vesting.
And of course, the best would be just transferring everyone to other teams inside the company. Yet, it is getting rarer every day.
Anyway, the underlying reasons is that US is actively trying to increase unemployment to fix the economy:
https://thehill.com/policy/3658981-why-the-fed-is-pushing-unemployment-higher/
Yes, this does not sound good at all. Apparently we were too productive, and received too high of wages, and that companies had to compete for talent.
Unfortunately, this means none of our jobs are actually secure.
The economic true-ism is a regular round of layoffs is a good way for a large organisation to sweep away “cruft”, the employees and workers who’s roles either don’t add value or those individuals that simply don’t deliver value (think those who have “quiet quit”).
It also helps keep an organisation from stagnating, as Thom says these companies are growing, which means they will likely bring back the headcount in areas of growth.
> Adjusted for $22.88 billion in cash-equivalents, the company’s net debt is at $25.74 billion. [1]
The cost of money is rising. The cost of debt will have tripled over this year. That is coming into next year’s expenses. Along with an expected slowish 2023, this seems expected.
[1]
The case of twitter has very specific events that likely would have come into play regardless of the tech sector at large. I think it was inevitable that musk would layoff most of the workforce especially after learning how much he overpaid and was forced to complete the contract. The “ultimatums” were an arbitrary, yet effective, way for him to cull the workforce, which I believe was always musk’s goal.
I think microsoft does this purely as a calculated cost cutting measure. I remember being at a job fair and finding it super ironic that microsoft was laying off thousands of redmond employees while simultaneously hiring new recruits in such a short timeframe. It told me a lot about the company that they were displacing experienced (yet presumably expensive) employees in favor of younger inexperienced but cheap labor.
We’re so far off from an ideal society it’s crazy how backwards and corrupt economic incentives are in terms of public interests.
It probably depends on lots of factors. If you’re well connected within a company, chances are you’ll be safe when it comes to potential layoff meetings. Otherwise though I think there’s a tendency for companies to earmark aging employees for culling, but to go about it in ways that flip the narrative. “Relocating” can be one way to achieve it while shifting blame to the employee “we’re giving you a job, you’re turning it down”.
Alfman,
There are three forces in work here (I think)
First one is the government fiscal policy. During covid they gave away more money than financially viable. And this caused both people and companies do unwise things. (Too much remote work, enlarged share prices, lots of bonuses, “quiet quitting”, anti-work, hoarding, scalping GPUs, Xboxes, PS5s, list goes on…).
Now they are trying to “cool down”, with maybe an even worse strategy (explicitly asking for more unemployment).
Second is companies being overall greedy.
Third is the regular churn, and not wanting to “never let a good crisis go to waste”.
I agree. His goal was to reduce the workforce. But I think he cut a bit too much. There were rumors badges could not be disabled, since he also let go of the team in charge of that.
I think this is the third one (churn). They always get new employees, but want to get rid of low performers. I believe there is no reliable way to measure it. However there are close proxies. Like letting go off entire teams (or large chunks) from low performing products. I read they let go about 160 people from 343 Studios, in charge of Halo Infinite. Even though the cause of all problems seem to be mismanagement (changing requirements, changing managers, not enough resources, waste of resources, …)
So theory goes like this.
“We have 90% good, and 10% lackluster employees”
“Let’s get a new bunch of people, where 95% are good”
“And let go some where maybe 80% are good”
So it raises the overall, at the expense of many good people.
Yes, who you know is always important. I have seen such people who jumped between projects, taking a lot of credit, and propelling themselves into higher management roles.
sukru,
Not that I feel like talking politics now, but yes it’s a mess. Party leaders have locked horns fighting over ideological battles without much regard for whats best for society. There are some exceptions who stand out and fighting for real social causes, but so much opportunity, energy, and money are wasted on dead ends, stalemates and thrashing.
Yes, although my point was that it’s not just about good versus bad employees. Even with two comparable employees, both deemed “good” will have different values to the company based on their costs. It’s inevitable that many/most new employees will face learning curves and actually under-perform those they’re replacing for a couple years. It’s when you look at the long game that a new employee who will take a couple years to train and catch up can become proficient and offer more value than a long term employee who is already proficient but also more expensive (ie salary, healthcare, and other benefits). Because this sort of thing is cyclic, the very same young employees who enter the workforce displacing older workers should probably expect the same thing to happen to themselfs in the future. I think ageism should be covered more in the media, though I don’t know it would make a difference.
I’ve seen it as well. Boy does it sting when you were the one due credit.
Thom Holwerda,
It’s can be an uncomfortable realization for employees, but layoff can correlate with higher financial success for the company in periods of worldwide consolidation. This is especially true in industries of high incumbency with low marginal costs (ie tech sector). If you are the executive at a top tech corporation that is already at the top and doesn’t need to work harder to get higher, then realistically you can start viewing salaries as there for the taking.
This is really sad news. A lot is going on these days. But it is unbelievable that multibillion-dollar companies are firing employees. They are a country in itself. After all, this is a tough time everyone is going through.