Massive job cuts hit tech industry as top companies sack workers
January 23, 2023221 views0 comments
By Cynthia Ezekwe
Thousands of employees in the technology sector have lost their jobs within the space of three months, as the sting from the economic downturn bites harder. This came as technology industries run a tight ship in order to scale through the unforeseen effects of the unstable economy.
Recently, Google’s parent company, Alphabet, disclosed its plan to lay off 12,000 employees, which is about six per cent of the company’s workforce.
Alphabet’s job cut affects teams across the company, including recruiting, some corporate functions, and some engineering and products teams.
The company disclosed this in its staff memo, days after another tech giant, Microsoft, said it would lay off 10,000 employees, which is about five per cent of its total employee base of over 220,000.
According to the memo, the Alphabet layoff is global, and the company has already emailed the affected employees. However, the cuts immediately apply to employees in the U.S., while the process will take longer in other countries due to local employment laws and practices.
Speaking on the circumstances that led to the decision,Sundar Pichai, Alphabet’s CEO, said: “Over the past two years, we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today.’’
“I am confident about the huge opportunity in front of us thanks to the strength of our mission, the value of our products and services, and our early investments in AI. To fully capture it, we’ll need to make tough choices,’’ he added.
According to Pichai, the company had a rigorous review across product areas and functions to ensure that people and roles are aligned with the highest priorities as a company, while noting that the roles being eliminated reflect the outcome of that review, as they cut across Alphabet, product areas, functions, levels and regions.
“To the Googlers who are leaving us: Thank you for working so hard to help people and businesses everywhere. Your contributions have been invaluable and we are grateful for them,’’ the CEO added.
Pichai also noted that there are severance packages which the company has made available to support the affected staff, while they look forward to greater opportunities.
“In the US: We’ll pay employees during the full notification period, which is a minimum of 60 days. We’ll also offer a severance package starting at 16 weeks’ salary plus two weeks for every additional year at Google, and accelerate at least 16 weeks of GSU vesting,’’ Pichai said.
The CEO further added that 2022 bonuses and the remaining vacation time will be paid to those affected, while offering 6 months of healthcare, job placement services, and immigration support for those affected, while ensuring those Outside the US, of the company’s support in line with local practices.
Previously, companies that have terminated their employees’ services disclosed that persistent inflationary rise, the macroeconomic environment, and the predicted recession as the major cause of the layoffs.
Thus, major enterprises have been forced to take decisive and cautionary steps to maintain costs and increase revenues.
Just like every other tech company that has terminated staff appointments over the last year,Microsoft Corporation, an American multinational technology corporation producing computer software, consumer electronics, personal computers, and related services, also explained that its plans for 2023 are to align its cost structure with its revenue and customer demand, which is the reason behind the layoff of about 10,000 employees.
Satya Nadella, Microsoft’s CEO noted that the company is looking to allocate its capital and talents to areas of secular growth and long-term competitiveness for the company. The company is also looking to change its hardware portfolio and the cost of lease consolidation as they create higher density across its workspaces.
In the same month,unstable industry events led to Crypto.com, a cryptocurrency exchange company based in Singapore. slashing its workforce by 20 per cent which was a decision taken to enable the company to navigate ongoing economic headwinds, and survive the downturn in the broader market, which has reversed much of the gain from the 13-year bull run.
Prior to the layoff, the Singapore-headquartered Crypto.com reduced its workforce in July 2022, which saw the exit of 250 workers.
Speaking on the decision taken by the company to slash its workforce, Kris Marszalek, co-founder and chief executive of Crypto.com said in a blog post: “The reductions we made last July positioned us to weather the macro economic downturn, but it did not account for the recent collapse of FTX, which significantly damaged trust in the industry. It’s for this reason, as we continue to focus on prudent financial management, we made the difficult but necessary decision to make additional reductions in order to position the company for long-term success.’’
“Several factors played into our decision to reduce headcount. While we continue to perform well, growing to more than 70 million users worldwide and maintaining a strong balance sheet, we’ve had to navigate ongoing economic headwinds and unforeseeable industry events,’’ he added.
Marszalek also noted that the collapse of FTX worsened the situation as it damaged trust in the crypto industry, while stating that crypto.com grew ambitiously at the start of 2022, while aligning with the trajectory of the broader industry, which changed rapidly with a confluence of negative economic developments.
Despite hopes that the layoff sting would not bite into the new year, in January, Amazon.com Inc, an American multinational technology company that specializes in e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence, disclosed its plan to lay off over 18,000 employees to achieve workforce reduction as a result of the unforeseen effects of the unstable economy.
Andrew Jassy, the chief executing officer (CEO) of Amazon.com Inc, explained in a statement, that the company hired rapidly during the pandemic, but needs to reduce the workforce as a result of the uncertain economy.
According to Jassy, the company plans to sack over 18,000 roles from the layoffs made in November 2022, and the ones they are about to make effective in 2023.
The CEO disclosed that some of the layoffs would take place in Europe, stating the reason behind the immediate announcement as the leakage of internal information by one of its teammates.
Jassy also said that the company understands the difficulty associated with the layoff, noting that the company does not take these decisions lightly either.
He said, “We are working to support those affected and are providing packages that include a separation payment, transitional health insurance benefits, and external job placement support.
Prior to Amazon’s layoff announcement,Salesforce, Inc. a famous American cloud-based software company that provides Customer Relationship Management (CRM services) also announced its plans to lay off 10 per cent of its workforce, a decision which will lead to over 7,000 workers in the company losing their jobs.
Salesforece made the disclosure in a letter addressed to its employees, on 4 January 2022, making reference to a challenging environment caused by the economic downturn, and the high number of employment during the pandemic.
Speaking on the layoff, Marc Benioff, the company’s chair and co-chief executive officer, stated that the environment remains challenging as customers are taking a more measured approach to their purchasing decisions, which resulted to the company’s decision to reduce its workforce by about 10 per cent.
Benioff also said the company would provide full support for those that will be affected by the layoff.
According to him, affected employees in the U.S will receive a minimum of nearly five months of pay, health insurance, career resources, and other benefits to help with their transition. He added that those outside the U.S. will receive a similar level of support, and the local processes will align with employment laws in each country.
The announcement from Salesforce just a few days into 2023 marked the resumption of the mass layoffs by tech giants, which started in the fourth quarter of 2022, and which analysts had predicted would continue into the first quarter of 2023. It followed the 11,000 mass layoffs by Meta and the 3,700 head cuts by Twitter among several others.