2023 was a challenging year for the world in economic terms. As a result, large corporations had to rethink their human resources policies to avoid huge financial losses. A huge number of large IT-related companies have started to reduce their staff and lay off employees by thousands.
Which companies laid off their employees in 2023-2024.
- The first large company to announce mass dismissals was Meta, which was banned in Russia and declared extremist. She announced plans to lay off some of the staff of Reality Labs, the metauniverse development unit. Mark Zuckerberg launched the plan in August 2022, and then announced his intention to lay off 11,000 employees, or 13% of the workforce.
- While Elon Musk was negotiating to buy Twitter, he announced his intention to lay off 10% of Tesla’s employees, equal to approximately 10,000. In late November 2022, Musk began firing the last employees. In addition, after acquiring Twitter, Ilon fired half of the company’s employees – 3,700 people – fighting corporate norms.
- Microsoft promised to lay off 1% of its employees, about 1,800 people. Six months later, in January 2023, the company began a second wave of layoffs, 10 times the first.
- Apple fired 100 people in a week, and Walmart, America’s largest employer, cut 200 employees in a tight time.
- Google has decided to lay off half the employees of the Area 120 startup incubator responsible for creating products like Gmail, AdSense, Google News, and Google Cardboard.
- Amazon also joined colleagues in the technology market, announcing plans to lay off 10,000 employees, 1% of the workforce.
- The taxi service Lyft fired 13% of its employees, which is approximately 650 out of 5,000 employees.
- The payment system operator Stripe also announced plans to cut 1,100 employees out of 8,000 employees. Staff received this information through e-mails sent to them shortly after the official announcement.
- In November 2022, Salesforce announced plans to lay off 10% of its workforce.
- On January 20, 2023, the CEO of Google’s parent company, Alphabet, Sundar Pichai, announced plans to lay off 12,000 employees.
- Crypto.com’s cryptocurrency exchange announced a 20% staff reduction of approximately 950.
- In January 2023, Spotify fired 600 employees, 6% of the workforce.
What’s the reason for the layoffs?
Many of the companies that have made large-scale cuts have attributed their actions to vague language. But some of them pointed to slower growth and increased competition, while others said that the number of employees did not correspond to the real economic situation.
Experts believe that technology companies grew rapidly against the background of explosive demand for IT products and services during and after the pandemic. However, the events of the past year have led to a slight decline in demand, forcing companies to take downsizing measures to maintain profitability.
Some experts point out that the market is saturated and could not continue to grow at the same rate as before. They argue that such rapid growth could not last forever, and that the decline in demand for IT products and services was inevitable. In addition, a number of experts believe that IT revenues have grown too fast and could not continue at this rate.
Experts stress that overheating of the market is a natural result of the new phase of the global crisis. The massive staff reductions are due to the economic instability that began in 2022, which has reversed the trend of aggressive recruitment over the past two years. Changes in user behaviour have also had an impact: with the end of the pandemic, people are spending more time in the real world, which has reduced demand for IT products.
Indeed, the global economic crisis that began in 2022 is intensifying this year, which affects many industries, including the IT sector. Companies are cutting staff to cut costs and maintain profits as people become more restrained in investment during a crisis. This is especially evident in such «overheated» companies as Google.
In addition, the initiation of CDS was a separate factor leading to deglobalization. Many governments seek to localize production in order to improve domestic performance and not share high technology with other countries. As a result, companies are reducing globally distributed employees, which also results in massive layoffs.
What’s next for the job market?
Experts believe that massive layoffs in international companies do not herald a global labor market crisis. Since the summer of 2022, there have been reductions, but their scale is not as significant as it could be.
One reason is that the workforce of the five largest technology giants has increased by 30-40% in the last two years, while the volume of cuts is about 10%. For example, despite cuts, Google fired fewer employees than it hired in just the third quarter of the previous year.
Analysts note that companies mostly cut back on loss-making projects and support functions, retaining almost all key professionals, including highly qualified developers, product managers and machine learning specialists, Move such employees from the closed units to more promising ones.
Experts indicate that IT-companies do not part with their leading employees, but rather get rid of «ballast». Thus, mass layoffs in the IT sector are not an indicator of the crisis in the labor market, but rather evidence of the optimization of companies’ activities.
