Global economic turbulence has hit technology companies this year, leading to slowing revenue growth and widespread layoffs, even as some segments of enterprise spending on IT seem to be holding steady.
What is a Layoffs?
A layoff simply refers to the termination of an employee of a company. It occurs due to business-related reasons and not because of the employee's fault. A company may lay off a single employee or multiple employees at the same time.
Understanding Layoffs
Layoffs typically affect groups of workers from several to thousands, as a result of an employer's effort to cut costs. That effort may be prompted by an economic downturn or corporate restructurings such as bankruptcy or a leveraged buyout by a private equity firm.
Layoffs are understandably unpopular with workers whether employers call them "downsizing," "rightsizing," or "smart sizing." Layoffs may also be termed a "workforce reduction" or a "reduction in force."
The reason for the layoffs varies, from cost-cutting to bad performance to financial difficulties. Some of the companies even faced criticism for their sudden decision. Many people lost their jobs during the pandemic and now these strings of similar layoffs are creating a ruckus in the world. The economic situation of the world is also a big reason for these layoffs. According to reports over 8000 people alone in just the first half of 2022 have been laid off by their companies.
we will talk about those companies who have laid off their employees and their reason for doing that. Furthermore, we will also talk about the companies that have the possibility to follow the path of laying off their employees. So, without any further ado, let’s get started.
HP
The American multinational IT Company, HP has joined the list of top tech companies laying off its employees. HP will lay off 4,000 to 6,000 employees, which is around 10% of its current global workforce of 61,000, over the next three years as a part of its cost-cutting efforts.
The company will also reduce its real estate footprint along with the layoffs. HP’s ‘Future Ready Transformation’ plan is expected to save the company as much as $1.4 billion annually by the end of 2025. It expects the restructuring and other activities to cost around $1 billion.
Zomato
India’s prominent food delivery startup, Zomato, is reportedly planning to lay off its employees on account of its cost-cutting efforts to become profitable. Zomato is going to lay off about 3-4% of its workforce, which currently consists of nearly 3,800 employees. Around 100 Zomato employees have already been affected in the product, technology, catalogue, and marketing areas. Zomato has called it a "regular performance-based churn." Earlier, Zomato laid off around 520 employees (13% of its workforce) in May 2020 as a result of the business downturn caused by the pandemic.
Amazon
Amazon has also joined the bandwagon of layoffs and is reportedly laying off 10,000 employees in corporate and technology jobs. The company’s layoffs will be focused on its device business, including its Alexa products, and its retail and human resources divisions. The layoffs represent less than 1% of Amazon’s global workforce of more than 1.5 million. It is the biggest job cut that Amazon has ever made in its history.
Meta
On November 9, 2022, Meta, the parent company of Facebook, Instagram, and WhatsApp, announced that it is laying off more than 11,000 employees, accounting for nearly 13% of its workforce. It is one of the biggest tech layoffs of 2022. According to Meta's CEO, Mark Zuckerberg, the reasons behind the company's mass layoffs include the macroeconomic downturn, increased competition, and diminishing ad revenues, which caused Meta's revenue to be lower than what he had expected.
Twitter is an American communications company founded by Jack Dorsey, Biz Stone, Evan Williams, and Noah Glass on March 21, 2006. Currently headquartered in San Francisco, California, United States, Twitter is one of the biggest social media platforms that has been all over the news in relation to one of the biggest acquisitions in modern times ($44 billion), led by billionaire techie, Elon Musk. Twitter laid off 30% of its staff (nearly 100 employees) from the recruiting team in July 2022.
Twitter laid off about 3,700 employees, accounting for nearly 50% of its global workforce, including 90% of employees in India, as a way to cut costs following the company's acquisition by Musk, which closed on October 27, 2022.
Unacademy
One of the biggest EdTech companies in India shocked everyone this year when they decided to lay off around 600 employees. It was a sudden decision in the month of April. The reasons for this layoff were said to be that the performances of the employees were not good enough.
After that, the edtech giant laid off 150 employees in June 2022. On November 7, 2022, Unacademy conducted another round of layoffs and laid off around 350 employees, accounting for nearly 10% of its workforce of 3,500, as the company tries to cut its expenses and generate a profit.
Microsoft
Microsoft Corporation or Microsoft was founded by Bill Gates and Paul Allen on April 4, 1975. Microsoft is an American multinational technology corporation that is unarguably one of the biggest tech companies in the world today. However, after the company announced that it would be laying off as part of a "realignment", Microsoft also joined the list of big companies laying off their employees. Besides, it is also important to note that Microsoft became the first tech giant to lay off employees.
Byju's
In October 2022, the biggest Edtech in India, BYJU'S took a drastic decision and announced that it will lay off 2,500 employees or 5% of its workforce. The unicorn, even after reaching a valuation of around $22 billion, decided to sack its employees. The startup's co-founder and CEO blamed macroeconomic conditions and the startup's plans to achieve profitability by the end of the current financial year as the reasons behind mass layoffs.
Microsoft laid off 1,800 employees in July 2022, and a month later, it laid off another 200 employees. In October 2022, it laid off around 1,000 employees, marking the third round of layoffs in the same year
Walmart
Walmart Inc., the popular American retail multinational corporation disclosed that it would be cutting the job roles of hundreds of corporate employees. In its Bentonville, Arkansas, headquarters, Walmart reported on August 3, 2022, that it would have to part with nearly 200 of its employees. The departments that would have to bear the brunt are numerous, including merchandising, real estate, and global technology, among others.
Google was an exception among the big tech companies carrying out mass layoffs in the economic downturn, but all that could be set to change. According to a report in The Information, Google has come up with new ranking metrics to identify low-performing employees and ease them out of the company.
Google managers have been asked to identify 6% of employees – or roughly 10,000 people -- as low performers in terms of their impact for the business, people with knowledge of the matter told The Information.
And also meesho, tesla, robinhood,.coinbase, blinkit, vedanta, trell, furlenco, Unilever, ledo learning, nestle, tesco,
Big companies and organisations are facing problems and many of them are laying off their employees in response to that. There are multiple reasons, varying from company to company. Some of the common reasons for the layoff are:
Companies are not able to adapt to the situations after the lockdown and pandemic.
the job cuts have been significantly driven by a hiring spree during the pandemic lockdowns. Although the reasons are company specific in nature, one cannot ignore the adverse effect of the pandemic driven hiring frenzy that was aimed at adapting to the new normal.
With the corona fears subsiding over the years, companies were left with too many workers paving way for mass layoffs in the sector.
Inflation is on the rise again.
Currently, the global economy is in its steepest slowdown. Since the aftermath of the pandemic crisis, the world's three largest economies – US, China and Europe – have been slowing down piercingly.
According to a comprehensive study by the World Bank, as central banks across the world simultaneously hike interest rates in response to inflation, the world may be edging towards a global recession in 2023.
"Global growth is slowing sharply, with further slowing likely as more countries fall into recession. My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging markets and developing economies.
Companies facing financial difficulties.
because the company decides to cut back on costs in some way. The need can arise from the fact that the company is not making enough profits to cover its expenses or because it needs substantial extra cash to address paying off debt.
When a company decides to lay off employees, it should conduct the process in the right way. Otherwise, it’s likely to fall into more financial problems arising from lawsuit costs or severance packages.
The slowdown of funding in the business world.
On the other hand, many startups are struggling to sustain themselves in an uncertain environment with a cash crunch and deficit in investments. More than 40 Indian Startups slashed their employees, mainly E-commerce, EdTech and Services companies.
There were even Startups that had to shut down their business, unable to get their business going due to the lack of funds. The year 2022 has not been a smooth sailing for Indian Startups and Funding winter is hitting them very hard. Many investors are either pulling out or asking the firms to cut down on costs by any means.
The Ukraine invasion by Russia has led many companies to stop doing business with the latter.
After years of rapid expansion bubbled by an exponential rise in demand post-Covid, a hiring spree was seen among all major global tech firms and startups. But as the dust settles down, experts say that tech companies are coming off a period of outsized growth, and we are seeing a self-correction in the market — with macroeconomic factors such as the Ukraine-Russia conflict combined with an air of an upcoming slow-down — plummeting consumer demands.
The inefficiency of employees.
Layoffs also occur when a company needs to eliminate some positions due to over-staffing, outsourcing, or a modification to the roles. A company may want to eliminate redundant positions in order to make its operations more efficient. If one factors in aspects like new management and a shift in the company’s direction where jobs are redefined, then it’s easy to see that laying off workers is closely related to cost-cutting.
Layoffs may have a considerable impact on the entire company or on just a few departments. Expanding some sectors, like IT, and shrinking others, like marketing, means that some employees will lose their jobs. In such a way, the company is able to accommodate the evolving needs of the growing sectors of the company.
Restructure and modernisation of a company.
Moreover, the trend of high level automation in workplaces also gained momentum significantly. Here, it needs to be noted that the concept of automation is not merely restricted to the substitution of human labour with machine labour.
Rather, at it's core, automation is about implementing a system to complete repetitive and mundane tasks without the need for human labour. Such technical makeovers are indeed one of the major driving forces behind the massive job reductions in the sector.
With the economy of the world facing jeopardy and several other reasons, a number of companies have frozen their hiring and they are:
Meta has frozen their hiring and it is said to be lasting through the first quarter of 2023. The main reasons, the company has given are the industry-wide downturn and privacy data changes.
In May 2022, Wayfair froze their hiring for 90 days and again the reason is the situation with the economy of the world.
Twitter freezes their hiring and many of its top employees are getting fired, the sole reason is the ownership change of the company, as it now belongs to Elon Musk.
Google is another company that has slowed down its hiring, though it has not frozen its recruitment yet, as mentioned by Google CEO Sundar Pichai, in the first week of July 2022.
What Should You Do When You Get Laid Off?
The first step after a layoff is to carefully review your contract of employment, as well as any severance package your former employer may offer. This may include provisions on severance payments, employee benefits, and healthcare insurance. Employers may attach conditions to severance agreements, such as requiring you not to claim unemployment insurance. It may be a good idea to negotiate your severance agreement and have an attorney review any paperwork before you sign.
Conclusion
Worst month for tech layoffs in an already terrible year. And barring a miracle, the fourth quarter will be the worst since the start of the pandemic.
Year to date, some 121,413 people at 789 different tech companies have lost their jobs. And the numbers are about to take another big jump.
Along with labor hoarding there has been a lot of talking about "quiet quitting." Some firms may be betting that they will be able to avoid layoffs through return-to-office mandates and some recent data indicates offers of remote work going down. Employees who don't want to come back will end up leaving the organization. Elon Musk demonstrated this CEO mentality earlier this year when he said workers should come back minimum 40 hours a week or quit.
On the brighter side, there are still companies that are actively hiring even now, the situation can still get better in the coming quarters. These macroeconomic factors or not something one can control, instead it is ideal for us to strengthen ourselves by monitoring the things in our control and doing our best to keep going forward and staying strong.