After an exceptional year 2021 for the technology sector, and the fact that in March 2022 these companies represented almost 30% of the total value of the S&P 500, the end of the year promises to be terrible for the sector with thousands of layoffs . As of mid-November, more than 73,000 American tech workers have been laid off so far this year in massive job cuts, according to a tally by Crunchbase News. But according to layoff tracking website Layoffs.fyi, more than 100,000 tech workers will have lost their jobs by 2022. And that number is likely to rise.
The Federal Reserve is aggressively raising interest rates to fight inflation, and with it, venture capitalists are “tighter” in their investments, forcing companies to focus more on profitability than on the growth. Tech giants are doing the same, as higher prices reduce their revenues, forcing them to cut costs. And they reduce them with layoffs. Tech companies as big as Netflix have cut staff this year, with some citing the effects of the COVID-19 pandemic and others pointing to overemployment during times of rapid growth.
The wave of layoffs began in late October and has dramatically reduced the number of employees at tech companies, particularly in Silicon Valley, but most large companies still have more staff than in 2019.
Tens of thousands of engineers, salespeople and support staff in one of the nation’s largest and highest-paying industries are now out of work. Gone are the days when, for years, tech workers with great resumes jumped from company to company for higher pay. It was not uncommon for engineers new to a company to receive offers of $200,000 a year plus a very good annual bonus. Tech companies came along offering perks like free meals, massages, dog walkers or laundry, in addition to unlimited vacation days. Now, with so many recently laid-off workers on the market, that will change. Wages will fall and people will have to take jobs they might not have considered before.
It is pointed out that the wave of layoffs means the end of an era for Big Tech. Some experts compare this situation with the dotcom crisis in the year 2000 when many people were hired, especially engineers, and at the end the bubble burst and online company stocks crashed.
For 10 years, Big Tech has dominated the American economy. Apple, Amazon, Google and Microsoft have all surpassed the billion dollar milestone, becoming by far the most valuable organizations in modern history. They have also generated huge amounts of wealth for tech investors, workers, and the economy in general. That situation is over and, for some, it conjures up a picture of what the rest of the US economy might experience if the predicted recession materializes.
Besides big names like Amazon, Twitter or Meta, others like Glossier, Better, Roku, Cisco or Asana have also been affected. Meanwhile, other companies such as Google have decided to freeze hiring for now.
Layoffs by company
Here’s the number of employees laid off at select tech companies so far this year:
Lyft: Ride-sharing company Lyft laid off around 700 workers, or 13% of staff, in early November. The co-founders attributed the job cuts to “a likely recession sometime in the next year”, as well as inflation and an increase in ride-sharing insurance costs. Shares of the company have fallen about 71% this year, more than double the decline of the tech-heavy Nasdaq index over that period. The laid-off employees will receive 10 weeks’ pay, health care coverage until next April, among other benefits.
Bandaged: cut about 1,100 employees. Earlier this month, the fintech company announced that it would lay off 14% of its workforce. “We face stubborn inflation, energy crises, higher interest rates, shrinking capital budgets and tighter start-up funding,” CEO Patrick Collison told employees. The company will pay them 14 weeks of severance pay, as well as their annual bonus for 2022, among other things.
Redfin: laid off 862 employees this year. The online real estate company has laid off around 13% of its employees. The company has cut more than a quarter of its workforce since April due to a housing slump that is expected to last into next year. The aggressive series of interest rate hikes by the Federal Reserve pushed mortgage rates to a 20-year high last month as the United States suffers from a continued slowdown in home sales and construction. houses.
Selling power : the enterprise software company laid off hundreds of workers two weeks ago. In October, Chief Financial Officer Amy Weaver said the company was seeking higher profitability as it aimed to achieve a 25% operating margin by 2026.
Microsoft: cut nearly 1,000 employees worldwide in October, but while significant, the job losses affected less than half of 1% of the company’s 221,000 employees worldwide.
Robin Hood: The online financial trading platform announced in August that the company would lay off 23% of its employees. It was done after 9% of its employees were laid off in April. Online retail stock trading soared amid pandemic-related stimulus payments in 2020 and 2021, but has slowed this year as consumers grapple with rising costs.
Coinbase: The cryptocurrency trading platform laid off 11,000 workers, or about 18% of full-time positions in June. CEO and co-founder Brian Armstrong told employees this was due to “the apparent economic downturn and an expected decline in company revenue.” The company laid off around 60 additional workers in its recruitment and institutional integration services just a few days ago.
The Big Tech crisis in Spain: how much tax are they paying?