Slashed budgets, rising interest rates, cost-cutting exercises and increased risk aversion are behind the recent spate of job cuts at huge tech firms.
Some of the biggest names in technology have announced sweeping job cuts in recent months, among them Amazon, Twitter and Meta (the parent company of Facebook, Instagram and WhatsApp). In total, some 120,000 jobs worldwide have been lost, according to figures from layoffs.fyi.
Whilst the reasons are many and varied (especially at Twitter following the high-profile takeover by Elon Musk), there remain some common themes.
The first is a result of the pandemic. During the various lockdowns around the world some tech firms made huge profits – which they then invested into other projects and opportunities. However, many of these didn’t materialise quite as anticipated. Meta was among those which miscalculated, with chief executive Mark Zuckerberg admitting that he had “significantly” increased investments, but this hadn’t played out the way he’d expected.
The result was a 13% reduction in the company’s workforce.
Elsewhere, big tech businesses continue to struggle with rising interest rates, which is hitting them particularly hard. Others are having to slash their advertising budgets to meet targets, whilst investors are piling on the pressure for them to undergo hefty cost-cutting exercises.
All this means that tech firms are also starting to become more risk-averse. The days of posting huge and ever-growing profits may well be over (at least for the time being), so there’s less appetite to sink large sums of money into new projects that may or may not provide a return.
This change could also impact those still employed at the tech giants, not just those who have been laid off. Continued cost cutting (along with greater job competition) could signal the end of the disproportionately large salaries, as well as the famously generous (and often rather quirky) job perks.
Reflecting on these emerging trends, technology analyst at PP Foresight, Paolo Pescatore, explained that all major firms had been hit – not just a select few.
“It’s been a really a disappointing quarter of earnings for many of the big tech companies,” he told BBC News. “No-one’s immune.”