As of press time, over 120,000 positions in the global technology sector have been axed by major companies, including the likes of Amazon, Twitter, and Meta. This is a stark contrast to the hiring spree these companies had throughout much of the pandemic; now, big tech execs say that they have seriously miscalculated.
Meta founder and head Mark Zuckerberg, for example, hired more than 15,000 new employees between January and September of this year. This was part of the social media visionary’s push to increase his company’s investments, including its human resources. Unfortunately, a rapidly changing social media scene, drastic changes in online advertising, and his own ill-advised drive to boost the Metaverse led to the removal of around 13% of the company’s total workforce.
Shifting Perspectives Lead to Company Realignments
For much of the current decade, the bulk of a tech firm’s income usually came from online advertising. This is the reason why so many tech companies hired more people during the pandemic, as they thought it would help them make the most out of a captive audience.
However, as the economy began a rampaging downward trajectory, online advertising was among the first areas where spending was either reduced or curtailed entirely, leading to a drastic downsizing spree for a number of companies.
And it isn’t just small, lesser known or emergent firms that are looking into a reduced workforce. PP Foresight tech analyst Paolo Pescatore says no one has been untouched by the situation as even major firms like Amazon and Apple are now feeling the economic pinch and have been forced to downsize.
Amazon, however, says that the reduction of its workforce was due to an unusually uncertain macroeconomic environment that has realigned its priorities based on what matters most to its customers. According to Amazon spokesperson Kelly Nantel, a number of teams in the company have needed to adjust as several roles are no longer relevant in the current situation. The company, nevertheless, assured those laid off that they would be given ample support until such time that they can get back on their feet.
Apple, on the other hand, is still hiring but only for specific positions and on an as-needed basis.
The Investors Weigh In
Tech investors are another group that has strongly influenced the current trend of workforce reduction in the industry. A number of investors and even venture capitalists have advised companies to reduce their operational costs, noting that many firms have an overly large staff component but are slow to respond to critical issues.
For example, activist investor Sir Christopher Hohn recently wrote a letter to Alphabet, the company behind Google and YouTube, advising its executives to reduce its workforce. He remarked that the company needed to be more disciplined when it came to operational costs and to cut its losses with regard to projects that, at present, seem to be going nowhere, including the self-driving car initiative Waymo.