Big Tech’s Pandemic Bubble bursts

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In January 2021, Microsoft CEO Satya Nadella spoke about the drastic shift towards online services that occurred during the first year of the pandemic. He noted that this shift has greatly benefited his company, stating that “What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry.” Nadella’s statement highlights the significant impact that the pandemic has had on the adoption of digital technologies across industries

Two years after Nadella’s statement, the situation has changed significantly. Microsoft recently announced plans to lay off 10,000 employees as businesses re-evaluate their digital spending during the pandemic and face broader economic uncertainty. Nadella stated that Microsoft’s customers are now attempting to “do more with less.” This trend is not unique to Microsoft, as Google-parent company Alphabet also announced plans to cut around 12,000 jobs, representing more than 6% of its staff.

Layoffs

Over the past three months, Amazon, Google, Microsoft and Meta (Facebook-parent company) announced plans to cut a total of more than 50,000 employees from their staff, a significant change from the early days of the pandemic when these tech giants were rapidly expanding to meet the increased demand for online services. During this period, many tech leaders believed that this growth would continue without interruption.

By September of 2022, Amazon had more than doubled its corporate staff compared to the same month in 2019, hiring over half a million additional workers and significantly increasing its warehouse operations. Meta also nearly doubled its staff between March 2020 and September of the previous year. Microsoft and Google also hired thousands of additional workers, as did other tech companies such as Salesforce, Snap, and Twitter, all of which have also recently announced layoffs.

But it seems that many of these leaders underestimated the extent to which the pandemic-induced growth would continue once people returned to their offline lives. Recently, rising interest rates, inflation, and recession fears have led to a decrease in advertising and consumer spending, all of which have negatively impacted tech companies’ profits and share prices. Wall Street analysts now predict single-digit revenue growth for Google, Microsoft, and Amazon and declines for Meta and Apple during the crucial December quarter, as per Refinitiv estimates.

The recent cuts, in most cases, represent a relatively small percentage of each company’s total headcount, effectively erasing the gains made in the past year for some companies, but leaving them with tens or in some cases hundreds of thousands of remaining workers. However, it still causes major disruptions to the lives of many workers who are now left searching for new jobs after their employers exit a period of seemingly limitless growth.

Apple is an exception among major tech companies as it has yet to announce layoffs, however, the company has reportedly implemented a hiring freeze in all areas except research and development. Apple’s staff grew by 20% from 2019 to last year, which is less than some of its peers.

“Apple has taken a more thoughtful approach to hiring and overall managing the company,” according to Kessler.

Tech CEOs, including Mark Zuckerberg from Meta and Marc Benioff from Salesforce, have expressed regret for over-hiring early on during the pandemic and not anticipating a decrease in demand for their products as Covid-19 restrictions were lifted. Pichai also took responsibility for Alphabet’s cuts on Friday and stated that he plans to refocus the company on its core business and highest priorities.

Interestingly, none of the Big Tech company CEOs who are currently announcing layoffs have experienced any changes to their compensation or job title. According to Kessler, the announcements of tech layoffs are expected to continue during the upcoming earnings season, as the economy shows ongoing warning signs. Furthermore, even companies that have not yet been affected may follow their peers in reducing their workforce.

Vic Gonzales III
Vic Gonzales IIIhttps://capiz-news.com
Vicente F. Gonzales III is a professional SEO specialist and a digital marketer. He also happens to be an accomplished content writer, website designer and digital strategist. Vicente's clients love him for his unwavering dedication to their success, as well as his witty, intelligent demeanor. When he's not helping businesses achieve their online marketing goals, Vicente can be found reading up on the latest SEO trends or spending time with his wife and two sons.

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