The technology industry is currently experiencing a wave of layoffs following the post-Covid boom. As companies struggle with inflationary pressures, a bleak outlook, and global economic recession, they are cutting jobs in record numbers:
Reasons behind Tech Companies Job Cuts
Inflationary Pressures: Amazon’s Example
Global Economic Recession: Reduced consumer and business spending
Bleak Outlook: Struggle to recover from the pandemic’s impact
Revenue Decline of Big Tech Companies
High-profile tech company’s job cuts: Including Amazon, Meta, Microsoft, Google, IBM, SAP, and Salesforce, have announced job cuts.
Revenue decline faced by big Tech: Despite a hiring boom during the pandemic, they now face revenue declines.
IT Spending Forecast for 2023
Forecasted IT spending for 2023: Modest growth expected in global IT spending.
Growth in Services: Data center systems and communications services growth is predicted to be less than 1%.
Decline in Hardware Sales: Hardware sales are forecasted to decline according to Gartner’s market research.
Major Tech Companies Announced Layoffs in Q1 2023:
- Kyndryl, a managed IT services provider that spun out of IBM, announced layoffs to streamline operations and become more competitive.
- The exact number of affected employees was not disclosed, but anonymous comments on job-loss monitoring website The Layoff.com suggested that staff in IT asset management roles and Kyndryl’s own CIO organization were among those let go.
- Kyndryl employs 90,000 globally and has been facing declining revenue and slow growth since its separation from IBM.
- IT services and consultancy firm Accenture announced it would lay off 19,000 employees, or 2.5% of its workforce, over the next 18 months to reduce costs amid uncertain economic conditions.
Tech workers were expected to be largely spared though, as the company said the cuts would primarily affect non-billable corporate functions.
- The decision came as demand for services stabilized following post-pandemic growth, and Accenture also lowered its fiscal year 2023 revenue growth forecast.
- Amazon said it plans to lay off about 9,000 more workers from several business units, including AWS, PXT (People Experience and Technology, the company’s HR arm), Advertising, and Twitch.
- The announcement came two months after Amazon unveiled plans to lay off 18,000 employees.
- AWS is a big revenue generator for Amazon but has not been immune to current macroeconomic conditions.
- Social media giant Meta announced a further 10,000 layoffs and said that it would leave 5,000 currently empty roles unfilled.
- Founder and CEO Mark Zuckerberg cited difficult macroeconomic conditions and a focus on “flattening” the company’s organizational structure as key factors in the decision to cut more staff.
- This announcement came four months after Meta confirmed that it would cut 13% of its global workforce, amounting to 11,000 jobs.
- Collaboration software company Atlassian said that it plans to fire 500 employees or around 5% of its overall workforce.
- The Australia-based company said that the job losses were organizational, and not driven by a need to cut costs, despite posting a net loss in its February financials.
- Atlassian saw its revenue grow 27%, to $873 million in the last quarter.
- Microsoft confirms layoffs in its HoloLens, Surface laptop, and Xbox products
- Reports emerged that Microsoft will lay off 100 employees from its industrial metaverse team and close the unit
- Microsoft expanded its augmented reality, virtual reality, and metaverse initiatives from consumer to enterprise, but cut the staff
- Microsoft committed to the industrial metaverse and did not specify the number of jobs it would cut
- Microsoft laid off 617 employees in Redmond, Bellevue, and Issaquah according to WARN from Washington state
- CEO Satya Nadella confirms that Microsoft will cut almost 5% of its workforce, impacting 10,000 employees, to align its cost structure with its revenue structure while investing in areas that the company predicts will show long-term growth.
- The downsizing maneuver comes as the company reported its slowest growth in five years for the first quarter of its fiscal 2023.
- Yahoo confirmed to let go of about 20% of its staff, or 1,600 workers, by the end of the year
- The move aimed to restructure the company’s advertising technology business unit and allocate finances more efficiently
- The layoffs marked the end of Yahoo’s attempt to compete with Google and Meta in the digital advertising market
- GitHub, owned by Microsoft, announced that it would cut 10% of its workforce, about 300 employees
- The remaining staff would work remotely to safeguard the company’s financial stability
- The company had already enacted a hiring freeze
- Zoom, the cloud-based video conferencing service provider, laid off 15% of its workforce
- The move came after a hiring spree during the pandemic due to uncertain macroeconomic conditions
- Zoom made changes in team structure and some members of its leadership team took pay cuts
- Dell Technologies announced layoffs of 6,650 workers, approximately 5% of its workforce
- The company would change the structure of its sales team and integrate the services division of its consumer and infrastructure businesses
- Splunk would lay off 325 employees, mostly in the North American region, as part of broader measures to optimize costs
- The downsizing decision aimed to prepare for uncertain macroeconomic conditions
- PayPal CEO Dan Schulman announced layoffs of 2,000 jobs, about 7% of its workforce
- PayPal downgraded its forecast for the fourth quarter, citing the challenging macro environment and slowing e-commerce trends
- SAP announced layoffs of 2,800 employees despite revenue rising 11% in 2022
- The job cuts were part of the targeted restructuring and not performance-based
- The revenue grew faster than SAP employee growth in 2022
- IBM eliminated 3,900 job roles or 1.5% of its global workforce after asset disposals
- CFO Jim Kavanaugh acknowledged that the business would have some “stranded costs” to address in early 2023, resulting in a “modest” charge of about $300 million
- The stranded costs were related to staff left with nothing to do following the asset disposals and would be laid off from the company
- Twitter lost 10% of its remaining workers, as about 200 were fired, including startup founders whose companies had been absorbed by Twitter.
- Twitter has fewer than 2,000 workers left on staff, down from about 7,500 just before Elon Musk bought the company in late October 2022.
- Twilio announced that it would slash its workforce by roughly 1,400, months after laying off an additional 816 during the fourth quarter of 2022.
- The cloud communications company said also that it would reorganize internally, creating two new business units, Twilio Communications, and Twilio Data & Applications.
- Alphabet, Google’s parent company, is cutting 12,000 jobs, or 6% of its global workforce.
- CEO Sundar Pichai takes “full responsibility” for the decision and offers affected employees at least 16 weeks of severance and six months of health benefits in the US.
- The decision comes after Alphabet posted lower-than-expected numbers for its third fiscal quarter.
- India-based social media startupShareChat is laying off 20% of its workforce in preparation for economic headwinds.
- The decision was made after much deliberation and in light of the growing market consensus that investment sentiments will remain cautious throughout the year.
- Alphabet’s robotics subsidiary Intrinsic AI eliminates around 20% of its workforce or roughly 40 employees.
- The decision was made in light of shifts in prioritization and the company’s longer-term strategic direction.
- Life sciences firm Verily, owned by Alphabet, is downsizing its workforce by 15% to simplify its operating model as part of the One Verily program.
- The company aims to reduce redundancy and simplify operational aspects within the company.
Enterprise data management firm Informatica is planning to lay off 7% of its total workforce through the first quarter of 2023 to cut costs.
A wave of layoffs is currently affecting the IT sector as a result of inflationary pressures, a gloomy future, and a worldwide economic slump. Despite a hiring boom during the pandemic, big tech companies are facing revenue declines. Forecasted IT spending for 2023 indicates modest growth, with hardware sales predicted to decline. The layoffs are expected to affect various departments, but tech workers are expected to be largely spared. Companies such as Kyndryl, Accenture, Atlassian, Microsoft, Yahoo, GitHub, Zoom, Dell, Splunk, and PayPal have announced layoffs to streamline operations, cut costs, and prepare for uncertain macroeconomic conditions.