The stretching economic recession has given rise to one of the dreadful consequences: layoffs. Even the highly-funded tech agencies are not immune to the restructuring process.
Microsoft Corporation has already provided a heads up on what is yet to come when it has confirmed that the company has cut jobs in multiple divisions, which include the Xbox unit, accounting for 1000 people.
The decision has been also followed by many other companies. Last week the Intel Corporation has landed on a decision to plan thousands of job layoffs due to the declining sales in the PC units.
The same trend has been followed by facebook’s parent application Meta platforms. The company has decided to decrease the size of the workforce by the end of 2023.
Meta platforms are quietly carrying out layoffs on Facebook to reduce the headcounts because the global economy’s trouble and declining ad spending impose a severe problem for all the giant tech firms.
A business insider has recently reported that before a recent weekly question-and-answer session between the workforce and chief executive officer Mark Zuckerberg, the executives have opened up to the directors across the company that the headcount of 15 percent of people should be tagged as needing support in an internal review process.
The selective restructuring process highlights the possibility of layoffs of about 15 percent of the workforce. They account for around 12,000 employees.
In recent months, Apple has fired about 100 contract-based recruiters, who are responsible for hiring new employees. It has been speculated that Twitter’s hiring process has slowed down significantly during the second quarter of FY22.
Netflix experienced a decline in stock prices. As a result, the company handed pink slips to most of the workforce this summer.
More companies will join the bandwagon.
A worsening global economy will result in tech firms resorting to ways to cut down costs while looking for investors.
But a bigger question surrounds the tech company, which is if the incipient pullback is a normal and warranted response in terms of the slowing economy or if the sector’s key players are entering into a thrifting era in this looming economy.
How are layoffs impacting giant tech firms?
This is not just a downgrade, the consequences are severe for the individual companies. The situation has been threatening to the advertising-dependent business models.
Meta, in particular, has struggled with a privacy update from Apple, which costs it more than 10 billion USD in lost ad revenue.
In addition, Meta has spent another 10 billion USD on building products and services from the metaverse in an attempt to take an upper hand into the virtual world that will help to anchor the company.
Google’s ad business is facing the same fate as meta which is vulnerable to the economic slowdown.
This can be attributed to the fact that companies cut back on costs during times of slowdown in the economy which has resulted in layoffs.
However, the company has some alternate plans that put it in a better position in comparison to Meta.
On the other hand, youtube is experiencing a surplus growth in its revenue which is acknowledged to the rise of the premium subscription product. The advertisers mainly focus on increasing their spending on search ads during downturns.
The concept of layoffs in tech firms may be difficult for the industry’s engineers, marketing experts, and product managers. Tech firm is often regarded as the industry which has set the bar high due to the provision of attractive benefits, high salaries, and perks like in-office massages and catered meals.
The tech industry has made massive profits during the pandemic. The share prices increased as businesses and consumers shifted to online platforms like Zoom Video Communications, Slack Technologies, and Netflix, and spent more time on social media.
The higher process continued and has even surged significantly.
At the same time, the startups have benefitted from the provision of new venture capital. The venture capital funding has increased by 14 percent in 2020 as compared to 2019.
The jump has been visualized in terms of mega ground deals that resulted in deals larger than 100 million USD during the pandemic.
But the inflation in the global economy has resulted in such a severe situation. The earnings of the biggest tech giants will demonstrate n how many employees a company has to layoff.
Layoffs can be painful but the brighter side to this process is that restructuring can lead to greater efficiencies and spending discipline, particularly impacting younger startups. The latter will benefit from a richer talent pool.
One of the venture capitalists has talked about the situation. He has stated that many of the startup businesses needed to go out of business between now and 2023.
Previously, all the ideas of the startups were funded. But, the current scenario will turn the tables, and not every company will be able to make it, and the companies should start embracing failure.
edited and proofread by nikita sharma
