Inflation and over-hiring are being cited as the reasons a slew of tech companies are letting employees go
By Zee Johnson
A number of Big Tech companies are implementing mass layoffs and cost-cutting tactics in wake of the current economic downturn.
On Wednesday, Facebook’s parent company Meta began laying off 11,000 of its workers (13% of its workforce), attributing the cuts to its rapid acquisition during COVID-19 which has now put a strain on profits during record high inflation, an MSN report said. It is the company’s first broad reduction in its 18-year history.
During an employee Zoom call with laid-off employees, CEO Mark Zuckerberg said, “Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected.”
Other companies like Salesforce, a cloud-based company, are following suit by eliminating hundreds of jobs. In a statement, a Salesforce spokesperson said, “Our sales performance process drives accountability. Unfortunately, that can lead to some leaving the business, and we support them through their transition.”
Lyft, Redfin, Stripe, Netflix, Peloton, Tesla, Coinbase, and Shopify are other tech giants who are issuing layoffs. More companies are expected to release statements in the coming weeks and many have decided to halt hiring for the foreseeable future.
Twitter has also made headlines for its job cuts just after new owner Elon Musk acquired the tech giant and subsequently fired about half of its workforce. Employees spanning departments including the company’s marketing and communications, public policy, wellness, ethical AI departments were a part of the reduction in force. Musk also shut down the company’s Employee Resource Groups. But in a turn of events, Musk is now asking some of the laid-off employees who were mistakenly let go to return to work.
Layoff announcements come at a surprise to many, as the Department of Labor’s October 2022 Jobs Report found that the U.S. economy added 261,000 jobs. While that number is strong, it is the weakest since December 2020, and is showing signs of slow down after the Federal Reserve’s recent 0.75% interest rate hike.
What does this signal for HR? Samer Saab, CEO at Explorance, believes tech companies have reached their ceiling, but thinks they’ll now be able to better support their workforces. “The layoffs in the tech world have taken place primarily because tech companies got to thrive during COVID’s induced remote world,” he says. “These job cuts are good because they allow the scarce job market to breathe a little and to rebalance workforce needs with workforce availability. This situation will also allow people, talent, and HR leaders to shift their preoccupation away from recruitment and retention and start building more balanced strategies allowing employers to create better environments for their employees to thrive, have impact, and grow.”