The current employment market in the U.S. depicts strength but is obscured by low employment rates and high job growth – and businesses have been struggling to adapt to the changing economy.
Layoffs have been an infamous implication, as an adage ever since the Covid pandemic has been communiqué, owing to uncertain macroeconomic conditions, strong tailwinds tumultuous to profitability, economic downturn, and the treading on thin ice between inflation and recession. Companies use the way of corporate restructuring as a means of survival, a method of cutting costs when revenues become sinewy.
Ever since the dot-com bubble of a few decades ago, the tech industry which had been resilient to challenges has unfortunately witnessed an increase in layoffs by 649 percent in 2022.
2022’s tech reckoning continued into this year with the 2023 layoffs costing tens of thousands of tech workforce their jobs. Only this time, the companies driving the mass employee reductions are big tech names of Google, Microsoft, and Amazon. With the enormous number of employees in any tech giant, even a small percentage of layoff is equivalent to thousands of employees falling into the unemployment sector.
Consumers saw price hikes of 9.1 percent in contrast to the nominal 2 percent of steady inflation in June 2022, according to the Federal Reserve, making it the highest inflation in 40 years. As a result, the cost of living leapt, purchases became leaner and businesses had to cut back on expenditures they considered insignificant. Tech companies relying on adverts, lost revenue when businesses saw a decline in advertising budgets, rippling to layoffs.
The U.S. Bureau of Economic Analysis showed data of a shrinking economy in July 2022 and spurred debates about a plausible recession phase, with a slippery slope for mass layoffs. Since November 2022, all scales of tech companies have been making downsizing headlines, as if competing against ‘Who axed more?’
2023 Tech Layoffs:
On an average, 288 tech companies have been cutting 3,300 jobs daily, globally.
Meta Platforms furloughed 11,000 employees in January this year over Zuckerberg’s vision of making 2023 the ‘year of efficiency.’
Among the other big tech companies following suit, Google laid off 12,000 jobs, Microsoft cut 10,000 people off their income, and IBM reduced its employee strength by 3,900. As per a report of IANS, the month of January was ill-omened for tech employees, with over 0.1 million people losing their jobs.
Amazon:
The company launched AmazonSmile in 2013 with the objective of philanthropic endeavors towards programs of great impact and ranked amongst the top corporate philanthropists in the U.S. After a decade of not being able to create the intended impact, a memo was sent to every one acquainted with the program, which announced the closing of AmazonSmile.
In Mid-November 2022, 1 percent of Amazon’s workforce was laid off. In January 2023, CEO Andy Jassy circulated an internal memo amongst employees, announcing a workforce cut of 18,000 jobs affiliated with corporate and technology. As a part of the cost-cutting strategy, Amazon had also been offering a voluntary severance buy-out package. This was another 1-2 percent furlough.
Betwixt truncated spending, the cloud infrastructure market had been experiencing slowing growth as close to 21 percent advancement in contrast to highs of 36 percent the prior year. With long-time rival Microsoft gaining steady momentum over Amazon’s cloud service, AWS, another round of layoffs announced today shouldn’t come as a surprise. With dipping market growth rates, rationalization and cost-cutting measures resembled imminence.
Amazon CEO Andy Jassy, formerly having been AWS CEO, announced the decision of laying off another 9000 employees in a furlough round, which included the cloud services division, advertising, and Twitch units.
In the memo, Jassy revealed the reason for the maladroit circumstances as managerial analysis. When all teams completed evaluating and assessing every aspect with appropriate diligence, AWS was no exception and had to face its share of cuts, according to CFO Brian Olsavsky.
The larger trend of tech companies pruning weight added 9000 employee terminations, taking the total toll of Amazon layoffs in 2023 to 27,000.
Amazon’s latest earnings report divulged declining rates of the cloud division, with 39 percent growth staggering to 20 percent this year. CFO Olsavsky added that the growth was inching more towards the bottom, and AWS’s year-over-year revenue growth in the first month of the year, is in the mid-teens.
“We expect these optimization efforts to be a headwind to AWS’ growth in the next couple of quarters.”
