Tech execs are moving from the idea about fast-paced growth to protecting their bottom line in the tech industry.
Last year was marked by small startups to tech giants expanding less with expenses under close scrutiny. This week, both Salesforce Inc. and Amazon.com Inc. announced intentions for layoffs.
The cuts at Amazon represent the largest in the tech sector so far, affecting more than 18,000 workers, mostly in retail, recruiting and device businesses. Chief Executive Andy Jassy oversees the device area, and he stressed cost management to The Wall Street Journal last month.
“I really do believe in the devices business,” Jassy said, but the investment just doesn't justify the cost in the current market.
The tech sector has always been more aggressive in expansion. The COVID-19 pandemic made the situation even more supercharged, but recently tech companies have shifted to cutting positions which was hastened by inflation and Russia’s invasion of Ukraine.
Salesforce Co-CEO Marc Benioff said he had hired too many employees during the revenue surge in the early stages of the pandemic. Salesforce said it would cut 10% of its staff. Meta Platforms Inc. Mark Zuckerberg and Twitter Inc. co-founder and former CEO Jack Dorsey expressed a similar sentiment.
Tech bosses are claiming responsibility for over-hiring and are now faced with cutting staffing. Snapchat, for one, plans to make cuts of 20% and more than 1,000 companies have laid off over 150,000 since the onset of 2022, according to Layoffs.fyi. Many of those laid off are bouncing back into new positions as unemployment remains at a low.
The tremendous growth in tech, which initially began at the end of 2008, ended in Nov. 2021 when the index fell 33%.
The pandemic spurred new tech hiring as people utilized remote work and digital services and goods. DocuSign, one of the largest beneficiaries of the pandemic, plans to cut 9% of its workforce before October.
Other tech companies have yet to make cuts, such as Alphabet Inc.’s Google, which grew by 12,800 in its third quarter. Its CEO Sundar Pichai said he would not make any forward-looking guarantees on layoffs.
Amazon saw a boon in the pandemic, so much so it had to double its logistics network and add hundreds of thousands of employees. However, in mid-Nov. the company announced it would be doing a series of layoffs.