The tech sector has seen a steep decline in jobs over the past few months. Layoffs.fyi reported that the tech industry saw the loss of over 330,000 employment opportunities since the beginning of 2021. Most of the job cuts were at major technology giants such as Amazon, Google, Meta, Microsoft, and Twitter. Several analysts are predicting more jobs cuts as these companies look to be more cost-effective with their operations.
Jamie MacEwan, senior media analyst at Enders Analysis, spoke out about the harsh realities of the tech sector. He stated that “At a certain point decision-makers at these companies forgot that the harvest period of trend-busting growth and cheap money wouldn’t last forever.” Analysts at Jefferies agreed, and suggested that Google needs to prioritize their core business drivers in order to remain successful post-layoffs. Meta has proven them the importance of reprioritizing investments in its core business, as the company has seen limited impact on its growth despite cutting 25% of its workforce.
1. Amazon is no exception to these jobs cuts, as their profitability and over-hiring has been a main concern of late. With additional cost clawbacks in progress, Oppenheimer analysts believe “more layoffs are necessary” to improve efficiency in the long run. The Jefferies note curiously collates Google’s added staff of 71,000 in the past 3 years, and the single round of job cuts of 12,000 they have conducted. This equates to a 6% reduction in the headcount, compared to double digit percentages in the other tech corps.
2. Apple has experienced a small reduction in their headcount of 164,000, which has grown only by 12% since 2020. This steady decrease is mainly due to its efficiency and profitability. However, Apple does not seem immune to the threat of layoffs, as threats of layoffs within their corporate retail team has been seen this past week.
3. Despite these layoffs, more are to be expected from the current venture capital environment. Pitchbook and the National Venture Capital Association reported a 25% decrease in US VC deals in the first 3 months of 2021. Insider reported that layoffs in US startups were up 1,700% from the same period of last year. In other words, more is to expect from the realm of startups, as the dust of the Silicon Valley Bank crisis is settling.
The long-term effects of these layoffs spell a worrying prospect. Companies must reconsider the way they invest and manage money in order to avoid excess spending and promote efficiency. Workers in the tech ranks should be aware of the potential impact of layoffs, but also the potential for success after the right strategies are put in place.
When it comes to company mentioned in the article, there are several firms ranging from major technology giants to smaller startups. These organization include Amazon, Google, Meta, Microsoft, Twitter, Apple, and startups that have relied on venture capital. Person mentioned in the article include Jamie MacEwan, senior media analyst at Enders Analysis, and Ruth Porat, Google’s chief financial officer. It is important to note that all of these companies and people have important roles to play when it comes to the success of the tech sector, with Porat helping to ensure cost-effectiveness for Google workers and MacEwan providing insight on how to improve the industry.
