Technology giant Cisco is expected to announce a major restructuring this week, including the layoffs of thousands of employees. It remains unclear whether this move is related to weaker-than-expected results, as the company’s quarterly report is only scheduled to be released on Wednesday. However, what is known is that the company is not the only one taking such steps, and in other cases, prominent technology companies have various The reduction was made to a certain extent.
Since the start of the year, 141 technology companies have laid off 34,300 employees, according to data from Layoffs.fyi, a website that tracks the scale of layoffs in the technology sector. The list includes layoffs due to company closures, but also includes nearly all technology giants, especially those with strong financial performance in their most recent quarterly reports.
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Microsoft laid off 1,900 employees five days after reporting a 17.6% increase in revenue to $62.02 billion. Google laid off more than 1,000 employees just before reporting a 13% increase in revenue to $86.31 billion. Amazon sent 1,000 employees home even as sales rose 14% to $169.96 billion. And Meta laid off dozens of employees even as sales rose 25% to $40.11 billion.
There were also a number of layoffs at small companies. Among other things, Zoom laid off his 150 employees (his 2% of the workforce). PayPal 2,500 employees (9% of the workforce, even though revenue increased by 9% to $8.03 billion). Discord laid off 170 employees (17%), TikTok laid off 60 people, and SAP laid off 8,000 people (7% of its workforce despite a 5% increase in revenue to $8.47 billion). ), eBay laid off 1,000 people (9%), and Snap announced that the company, Snapchat’s parent company, had fewer employees, despite a 5% increase in revenue to $1.36 billion. 540 employees (10% of the workforce) were laid off.
While most of these rounds are certainly not as extensive as the big wave of layoffs in 2022 and 2023, they are still significant, especially against the backdrop of the difference in current economic conditions compared to last year. At that time, the global economy was facing an uncertain economic crisis and fear of rampant inflation, which seriously damaged the financial performance of almost all technology companies. They also suffered from increased expenses as a result of mass hiring on the back of trends experienced during the coronavirus period.
But over the past year, companies have made major efficiency moves (Mark Zuckerberg in Meta magazine defined 2023 as the “Year of Efficiency”), cut costs and laid off large numbers of employees. , which brought both revenue and profits back to normal. growth trajectory. In the most recent fiscal year, the total revenue of the Big 5 (Microsoft, Apple, Amazon, Google, Meta) was $1.63 trillion, an 81% increase from five years ago. Investors were rewarded accordingly, and the total value of the company increased by $3.5 trillion.
So why are workers still being laid off when all the data suggests it’s time to bring them back to work, or at least stop layoffs? One reason is , a leftover from a massive hiring effort during the pandemic. According to the New York Times, between the end of 2019 and the start of large-scale layoffs, Apple, Amazon, Meta, Microsoft and Google added more than 900,000 employees. Over the past year and a half, companies have cut about 112,000 jobs as economic conditions improve. However, the company still employs 2.16 million people, 71% more than before the pandemic.
Roger Lee, founder of Layoffs.fyi, told Bloomberg: “Given high interest rates and negative trends in the technology sector that have persisted for longer than expected, technology companies are still looking to reduce their extra burden during the pandemic.” “We are doing so,” he said. “However, current job cuts are likely to be smaller in scale and more focused than those in 2023.”
So if last year companies carried out a kind of panic layoff with the aim of cutting costs at all costs, now the moves are being made in a more calculated way, primarily by providing salaries. It’s not meant to be directed at business units or divisions. sufficient performance. “You go through a cycle of intense focus on innovation, and then the pendulum swings back to focus on revenue,” said Tim Herbert, vice president of research at CompTIA, which monitors technology employment trends through analytics. It will become.” told The New York Times about the number of job ads. “But when you read about Amazon cutting its Alexa workforce or Google cutting its Pixel Phone team, it shows that they are more focused on profit margins. They are cutting where they can. And we’re reallocating resources.”
Another reason is that many companies are shifting their focus to artificial intelligence (AI)-based development or working with AI-based tools. In this context, not all layoffs result in a reduction in employment, and companies may simply replace employees with certain skills with employees with other talents. According to CompTIA analysis, the number of job openings related to or requiring skills in the field increased from about 2,000 in December 2023 to 17,479 in January 2024. . The number of job openings in January increased by 18,000 compared to December. The unemployment rate in this sector is 3.3%, compared to 3.7% in the US job market.
In some cases, the shift to the use of AI has led to job cuts, with companies preferring to invest in developing and implementing AI capabilities instead of hiring thousands of employees every quarter. This trend emerged from what Meta CEO Mark Zuckerberg said in a conversation with analysts after the company’s quarterly report was released last week. He said Meta laid off employees in January to cut costs and “allow us to invest in our long-term, ambitious vision for AI.” He added: “We are better run as a lean company.”
“Most of the layoffs have already taken place and we feel that companies will start to recover,” Bart Bean, CEO of staffing firm Insight Global, told Bloomberg. “However, the situation remains very uncertain, and we expect the market to remain this way for another two quarters before the Fed cuts rates again.”