The tech sector has recently experienced a wave of cost-cutting measures, such as cutting free breakfasts and lunches and eliminating thousands of workers. This is not just about sustaining short-term problems; it’s the current generation of tech CEOs demonstrating to investors that they can create a sustainable platform in the long run.
It appears that this strategy is paying off, as Microsoft and Alphabet – two of the biggest contributors to the recent chopping axe of layoffs – were glowing in their first quarter reports this week. Microsoft posted a 7% yearly increase in revenue to a staggering $52.9 billion while Alphabet also reported a 3% increase in revenue to a total of $69.8 billion. Meta, a lesser known player among the Big Tech, reported encouraging numbers as well, with revenue growing 3% year on year to reach $28.6 billion.
The move towards AI-focus is a key part of the efficiency investment for these Big Tech giants, and CEO’s have been vocal about it. Microsoft CEO Satya Nadella said, during the recent Davos event, that the company would have to “do more with less.” This same sentiment was echoed by Alphabet’s Sundar Pichai, who suggested that streamlining the decision-making process from three people to two or one could improve efficiency by 20%. Mark Zuckerberg, for his part, has talked of creating a “leaner” and “flatter” Meta.
Amid the promise of efficiency are the casualties of layoffs. Unfortunately, some of the blame can be placed on the CEO’s responsible for the layoffs, as Insider reports that many of these companies have over-hired during the pandemic, leading to a swell in inefficient “”fake work.””
Companies are now turning to AI technologies to help create records cost-savings and efficiency dividends. OpenAI’s ChatGPT has revealed that a nimble team can compete with the tech giants and drive innovation. Microsoft has already responded to this by implementing GPT-4 into their search engine Bing, and Google is now racing to do the same with their core search engine.
Overall, Big Tech appears to be on track for the “Year of Efficiency” if the first quarter performance is any indication. However, the path to success has been punctuated by thousands of layoffs, and the workers affected can place the blame squarely on the shoulders of those who decided to make the cut.
