Google, Meta, Apple, Spotify and more: Why tech companies are slowing down hiring
Oracle has reportedly started to layoff employees in the US. Though the actual number of employees that are being let go remains unknown for now, as per a report by The Information (via IANS), layoffs are happening across roles including CX pre-sales engineers and marketing, CX Commerce, analyst relations, talent acquisition, CRM and even developers. The report also says that in addition to laying off employees in the US, the company was also planning to cut jobs in Canada, Europe and India in the coming months. The move is a part of the company’s efforts of targeting cost cuts of up to $1 billion in a bid to serve one of its newest cloud customers — TikTok.
While Oracle may be opting for cost-cutting measures in order to be able to scale up it operations to make room for new customers, it is not alone in tech world to opt for such drastic measures. Companies across domains from giants such as Google, Apple and Meta to crypto-companies such as Unocoin and Coinbase to gaming giants such as Niantic and NVIDIA to streaming platforms such as Netflix and Spotify are slowing down hiring or laying off employees across the globe.
Interestingly, all of this happening around the same time, which points towards a larger trend or the reason as to why this is happening. We will talk about it shortly, but first let’s talk about all the recent developments.
Tech companies that have announced layoffs or slowdown in hiring
Alphabet Inc CEO Sundar Pichai in a letter to the employees last month said that the company would be slowing down hiring for the rest of the year. In the letter he also said that Alphabet had hired 10,000 new employees in the second quarter of the year and in the rest of the year and in 2023, the company will be hiring people for critical roles only.
“Because of the hiring progress achieved so far this year, we’ll be slowing the pace of hiring for the rest of the year, while still supporting our most important opportunities. For the balance of 2022 and 2023, we’ll focus our hiring on engineering, technical and other critical roles, and make sure the great talent we do hire is aligned with our long-term priorities,” he said in the letter, as reported by Bloomberg.
Microsoft
Microsoft slashed jobs across divisions last months after announcing its quarterly earnings report on June 30, 2022. The layoffs, as per a Bloomberg report affected less than one percent of the company’s workforce and were a part of the company’s move of “evaluate our business priorities on a regular basis, and make structural adjustments accordingly.”
Amazon
Amazon, earlier this week, laid off 1,00,000 workers mainly from its distribution centres and fulfillment centres marking the single largest drop in the recent time. The company employees 15 lakh workers globally. The company had cut 27,000 employees in the first quarter of the year.
“I think it’s right for people to step back and question their hiring plans. We’re doing that, as well. I don’t think you’ll see us hiring at the same pace we did over the last year, or the last few years,” Amazon’s Chief Financial Officer Brian Olsavsky said in the company’s earnings call.
Meta
Meta too has announced its plans of steadily reducing its headcount over next year. During the company’s earnings call last month, Meta founder Mark Zuckerberg said that the company had hired a lot of people earlier this year and that the headcount will be sufficient for the next few quarters. He also said many teams were going to shrink. “Now this is a period that demands more intensity, and I expect us to get more done with fewer resources,” he said during the earnings call.
He also said that Meta was leaving certain positions unfilled in response to attrition and focusing on performance management to weed out staffers unable to meet more aggressive goals.
Apple
Apple, as per a Bloomberg report, is planning to slow down hiring in 2023. While the company isn’t taking any drastic measures, as per a Bloomberg report, some groups won’t see increased staff next year While some positions won’t be backfilled.
Twitter has been letting employees go ever since the Elon Musk takeover bid began. This includes the company’s top executives, some of whom also talked about the sudden layoff on Twitter. More recently, the company let go off 30 percent of its talent acquisition team. The move came after the company announced a company-wide hiring freeze in April this year.
Uber
Similarly, Uber too announced a slow down in hiring. In an email to the employees in May this year, Uber CEO Dara Khosrowshahi said that the company ‘will treat hiring as a privilege and be deliberate about when and where we add headcount’, CNBC reported. The move came despite Uber’s revenue more than doubled to $6.9 billion in the first quarter of the year.
Netflix
Netflix, in the second round of layoffs in June this year, sacked 300 more employees, which represents around three percent of the company’s workforce. “Today we sadly let go of around 300 employees…While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth,” the company had said in a statement, as reported by CNBC.
Spotify
Similarly, Spotify CEO Daniel EK, in a letter to the employees, said that the company was slowing down hiring by as much as 25 percent. He said that while the company will still hire new talent but it will be more prudent in its approach.
Niantic
Pokemon Go-maker, Niantic, last month laid off eight percent of its workforce, which around 85-90 position. The company has also canceled four projects including Transformers: Heavy Metal. As per reports, Niantic CEO in an email to the employees said that Niantic was ‘facing a time of economic turmoil’ and that it had to further streamline its operations’ to weather any future economic turmoil.
Unity
Unity, back in June this year, laid off around four percent of its workforce globally, which is around 300 to 400 employees. While the company didn’t provide a reason, a spokesperson told PC Gamer, “As part of a continued planning process where we regularly assess our resourcing levels against our company priorities, we decided to realign some of our resources to better drive focus and support our long-term growth.”
Tesla
Tesla CEO Elon Musk while addressing Bloomberg’s Qatar Economic Forum in June this year said the he planned to reduce the company’s salaried workforce by over 10 percent over next three months keeping in view the present macroeconomic conditions.
“Tesla is reducing the salaried workforce roughly 10% over the next probably three months or so…It’s quite clear we expect to grow our hourly workforce. We grew very fast on the salaried side and we grew a little too fast in some areas, and so it requires a reduction in salaried work force,” Musk had said at the time.
Coinbase
Similarly, Coinbase too announced a slowdown in hiring. Coinbase CEO Emilie Choi in a blog post said, “we’re announcing we’re slowing hiring so we can reprioritize our hiring needs against our highest-priority business goals.”
Beyond these companies such as Unocoin, NVIDIA, Snap, and WazirX too have announced similar measures.
In India, ed-tech startup Udemy slashed 1,000 jobs in April. Similarly Byju’s, as per some reports, laid off 2,500 workers, while Unacademy laid off 2.6 percent of its staffers in June this year.
These are some of many tech companies that have let go off employees this year. According to the numbers compiled by Crunchbase, more than 32,000 tech workers have been laid off in tech in the US until July 2022. This number is much higher in India wherein more than 43,000 workers have been laid off in 342 companies since April 1, 2022. This brings us to the most important question — why companies around the globe are slowing down hiring and decreasing their headcount?
Why is this happening?
There are many reasons for this and the answer is anything but simple. For some companies, the move can be seen as a way for them to balance out excessive hiring that they did earlier, as it happened in case of Amazon and Apple, for others, it can be seen as a way to counter slow growth and a decrease in subscriber count, as is the case with Netflix and Meta. There is a third category of companies that are just trying to keep their head above water. As Twitter CEO Parag Agrawal said at a townhall meeting with the company’s employees recently — “Our costs are more than our revenue. That’s not a good thing.”
Beyond that, uncertain economic condition or a looming recession is what is acting as a key factor that is driving these precautionary yet drastic measures. While some tech executives have openly talked about it with their employees, others are taking a more reserved approach.
“The uncertain global economic outlook has been top of mind. Like all companies, we’re not immune to economic headwinds. Something I cherish about our culture is that we’ve never viewed these types of challenges as obstacles. Instead, we’ve seen them as opportunities to deepen our focus and invest for the long term,” the Alphabet Inc CEO told the employees in the letter.
Zuckerberg too didn’t shy away from talking about it when he said, “If I had to bet, I’d say that this might be one of the worst downturns that we’ve seen in recent history,” in a weekly employee Q&A session last month (as reported by Reuters). Similarly, Musk while answering a question on the looming recession at QEF said, “I think a recession is inevitable at some point. As to whether there is a recession in the near term, I think that is more likely than not.”
Spotify spokesperson Adam Grossberg pointed to comments from Spotify CFO Paul Vogel at the company’s investor day said, “We are clearly aware of the increasing uncertainty regarding the global economy. And while we have yet to see any material impact to our business – we are keeping a close eye on the situation and evaluating our headcount growth in the near term.”
On the other hand, the Uber CEO took a more reserved approach when he said, “It’s clear that the market is experiencing a seismic shift and we need to react accordingly,” in an email to the employees.
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