After the dust seemed to have settled over job cuts earlier in the year, Meta Platforms Inc (NASDAQ:META) announced on March 14 that it would lay off 10,000 more workers, after laying off a combined 11,000 workers in November represents a workforce reduction of 25% compared to the company’s peak just six months ago. CEO Mark Zuckerberg previously told analysts that the company is trimming projects that aren’t meeting expectations or are no longer critical to its vision, while reducing its middle-management workforce to be able to align its decision-making with what it held Year of efficiency to accelerate.
Restructuring efforts are allowing for the quiet closure of businesses that have not lived up to expectations
The truth is that a major restructuring will allow Zuckerberg to quietly abandon its misguided efforts to sell virtual reality headsets to employers. Still, the company continues to spend billions of dollars to make the meta-universe a reality through virtual reality and augmented reality technologies, since its Reality Labs division spent about $13.7 billion on sales of Lost $2.16 billion.
ENTER TO WIN $500 IN STOCK OR CRYPTO
Enter your email address and you’ll also receive the ultimate morning update from Benzinga AND a free gift card worth $30+!
It seems that Musk was the one who started the trend
Aside from his EV brand, Elon Musk also seems to have been one of the first to start the tech layoffs, slaughtering Twitter’s employees last year when he acquired the social media platform by hiring the workforce from Reduced 7,500 employees to about 2,000, reportedly with another 10% of last month’s staff cuts. The fact that he somehow managed to keep the platform going, Musk was somehow able to keep the social media platform going has certainly inspired other CEOs to test their ability to do more with less, to re-evaluate what would be a skeletonized workforce in this case.
Apple seems closer to getting on the layoff train
Apple Inc. (NASDAQ:AAPL) was a rare player to avoid the wave of large layoffs, but it also didn’t partake in the pandemic-induced hiring glut. On March 15, however, it joined the cost-cutting bandwagon when it was announced it would ease up on bonuses and hiring, prompting fears of layoffs on the horizon. As such, it can be argued that Apple has avoided layoffs largely because it has been more measured in its hiring and spending during the pandemic, with even CEO Tim Cook taking a pay cut himself.
A herd mentality
It’s no secret that Silicon Valley companies hire and fire together as a pack. In January, Amazon.com Inc (NASDAQ:AMZN) announced a new round of layoffs across multiple businesses, affecting 18,000 employees. Twilio Inc (NYSE:TWLO), Dell Technologies Inc (NYSE:DELL), Zoom Video Communications Inc (NASDAQ:ZM) and eBay Inc (NASDAQ:EBAY) also closed the Google relocation of Alphabet Inc (NASDAQ :GOOG) to 12,000 employees, Microsoft Corporation (NASDAQ:MSFT) 10,000 employees and Salesforce Inc (NYSE:CRM) 7,000 jobs. A former PayPal Holdings Inc (NASDAQ:PYPL) executive, Keith Rabois, wasn’t the only one to criticize those companies for being overstaffed and unproductive.
Silicon Valley takes a page out of the auto industry book
Unlike the auto industry, where electrification is killing some jobs, tech executives blame overhiring and bogus work like meeting attendance for having to thin out the ranks. But then the question becomes whether this is the effect of a downturn or simply that it’s time to work smarter and get leaner. This scenario undoubtedly mirrors that of the auto industry and the global restructuring that General Motors (NYSE:GM) underwent in 2019, as it shed tens of thousands of jobs and closed factories in every state. On the other hand, GM and Ford Motor (NYSE:F) are in dire need of software-savvy employees now, since EVs, unlike internal combustion vehicles, are more about software than hardware.
Layoffs reveal a deeper truth
The intense boom in tech hiring has now turned into a trend of mass layoffs. While this is about cost control on the surface, it’s also a signal of a deeper shift, as Big Tech used to make its own rules but now needs to reevaluate its metrics of success to please Wall Street. A clear example is Salesforce, whose CEO Marc Benioff has defied calls for years to increase the company’s profitability alongside sales, but activist investors have forced him to focus more on profit margins and consequently reduce the company’s workforce.
The impact of an economic downturn
At the moment it seems that junior positions are still in demand, while middle management is the one that takes a hit. But that cooler hiring market has also given way to salary normalization, as CIO Dive reported that data suggests tech employee salaries are still rising, but more modestly compared to the last few years. The long-term impact on IT talent remains to be seen, but it’s clear that tech companies are turning to more traditional metrics of success, showing that at the end of the day, it’s all about making Wall Street happy.
DISCLAIMER: This content is for informational purposes only. It is not intended as investment advice.
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.