It has been a bad start to 2023 for the technology industry. The tech staff cuts of 2022 have carried over into the new year – with no sign of slowing down.
As sales and profits begin to slow after the pandemic, which saw growth in e-commerce and social media while billions were trapped in isolation, company officials are now commonly citing fear and uncertainty of a looming recession when delivering the announcement of staff cuts.
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Over 300 tech firms have carried out 100,000 staff cuts across the globe since the beginning of the year, according to data from Layoffs.fyi. That’s more than the entire first half of 2022.
How did the industry get here?
The tech industry was steadily growing before the pandemic with mass investment poured into cloud computing, cybersecurity, artificial intelligence (AI) – demanding the need for more employees.
However, when the pandemic hit tech companies quickly tightened their wallets, leading to a mass sweep of staff cuts, despite the demand for employees.
But when economic conditions improved in the fall of 2020, demand for electronics like gaming systems, computers and smartphones exploded – leading tech companies to need a larger workforce again.
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By GlobalDataThis led to a hiring spree in the industry.
Then, in March 2022, interest rates began to soar in order to get inflation under control, which saw tech companies hit badly. This is because they rely much more heavily on outside funding than other industries.
“Such a reduction in staff across multiple high profile businesses is surely being taken as a further loss of confidence in the tech sector,” Kevin Poulter, employment partner at national law firm Freeths, told Verdict.
“Many organisations through the pandemic have adopted competitive recruitment drives in a bid to train and secure the best talent.
“The ‘uncertain economy’ already cited by Amazon and Microsoft continues to face many businesses and will continue to do so through 2023.”
Here are just some of the tech staff cuts carried out since the beginning of 2023. You can read our previous list from last month here.
Zoom
Zoom, a videoconference company that hit whopping highs during the pandemic, cut its workforce by around 15%, according to CEO Eric Yuan in a memo to employees this week.
The mass lay off equated to around 1,000 employees, who have seen user growth and profits fall steadily in recent months.
The company exploded during the switch to work-from-home forced by the pandemic, tripling its original size in just two years.
Yuan told employees that the lay offs are part of a reset as the “world transitions to life post-pandemic.
“The uncertainty of the global economy, and its effect on our customers, means we need to take a hard – yet important – look inward to reset ourselves so we weather the economic environment.”
PayPal
PayPal announced it would be cutting 7% of its staff on Tuesday, equating to around 2,000 employees.
According to President and CEO Dan Schulman, the layoffs come as the company adapts to “the challenging micro-economic environment.”
“Addressing these changes requires us to make hard decisions that will impact some of our colleagues,” Schulman said.
“Change can be difficult — particularly when it includes valued colleagues and friends departing.”
IBM
IBM Corp, the American multinational technology giant, announced it would be laying off 3,900 employees on Wednesday.
The cuts, which will be impacting around 1.5% of the company’s workforce, come as IBM missed its annual cash target.
James Kavanaugh, IBM’s chief financial officer, told Reuters the company is still “committed to hiring for client-facing research and development.”
Company officials estimate that the cuts will cost the company $300m from the January to March period.
Spotify
Spotify, the Sweden-based music streaming giant, announced plans to slash 6% of its workforce on Monday.
According to CEO Daniel Ek, the job cuts will affect around 600 employees across the company.
It comes as the company faced a challenging business environment after a strong performance throughout the pandemic, Ek told employees in a memo.
“Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us,” he said.
“In hindsight, I was too ambitious in investing ahead of our revenue growth.”
In October, the company announced it would be slowing down hiring into 2023.
eBay
E-commerce giant eBay announced on Tuesday in an SEC filing that it would be laying off around 500 people in the next 24 hours, equating to 4% of its workforce.
CEO Jamie Lannone said the layoffs were happening to ensure the company focuses on investing in new technologies, company growth and “to deliver better end-to-end experiences for our customers and to support more innovation and scale across our platform.”
E-commerce company eBay announced in an SEC filing on Tuesday that it’s laying off 500 people, or 4% of its workforce, within the next 24 hours.
In a letter to eBay employees, CEO Jamie Iannone said that the layoffs are happening to help the company focus on growth, invest in new technologies and “to deliver better end-to-end experiences for our customers and to support more innovation and scale across our platform.”
“Importantly, this shift gives us additional space to invest and create new roles in high-potential areas — new technologies, customer innovations and key markets — and to continue to adapt and flex with the changing macro, ecommerce and technology landscape,” Iannone wrote in the release.
Coinbase
Cryptocurrency trading platform Coinbase announced it would be laying off 950 people last month.
“As we examined our 2023 scenarios, it became clear that we would need to reduce expenses to increase our chances of doing well in every scenario,” CEO Brian Armstrong said in a statement.
“While it is always painful to part ways with our fellow colleagues, there was no way to reduce our expenses significantly enough, without considering changes to headcount.”
The cuts are estimated to cost the exchange between $149m and $163m in expenses.
The recent news follows a long wave of paycuts at coinbase, the first of which arrived last June when it announced it would be laying off 18% of its workforce.
Wayfair
Wayfair, an online home goods retailer, announced it would be laying off around 1,750 workers equating to about 10% of its staff.
The news comes after the company saw great performance during the pandemic, as customers spent more time at home and increased their spending on furniture and home improvements.
However, the economic climate is now working against the company.
As the world begins to get back into the office and reset to life without the pandemic, along with rising inflation, spending on household goods and nonessentials has decreased.
The layoffs come after a previous round of cuts in August that saw 5% of the company’s workforce laid off.
“We thrive when we are scrappy and dedicated to customer outcomes,” Niraj Shah, Wayfair CEO and Co-founder said Friday in a message to employees.
“Unfortunately, along the way, we over-complicated things, lost sight of some of our fundamentals and simply grew too big.”
GlobalData is the parent company of Verdict and its sister publications.
