The high-flying tech industry faces a reckoning as the economy slows and customers pull back spending.
In the past month alone, tech companies have cut nearly 50,000 jobs, reversing a hiring frenzy that grew during the pandemic as millions of Americans shifted their lives online. Google parent Alphabet is the latest to cut its headcount, announcing 12,000 layoffs, or about 6% of its global workforce, on Friday.
Despite the surge in layoffs, most tech companies are still significantly larger than they were three years ago. However, industry analysts expect more industry cuts in 2023 as the Federal Reserve continues to raise interest rates as it slows economic growth.
This year, “tech layoffs will be a major theme as Silicon Valley, after a decade of hyper-growth, now becomes a cost-cutting mode reality,” analysts at Wedbush said in a Friday research note.
Experts say what that means for tech workers is too early to say. Despite the flurry of layoff announcements, employment in the information sector rose for most of last year, falling only in December. That suggests that talent demand remains strong enough that many laid-off tech workers will likely be able to find new jobs.
“While layoffs at high-profile companies make headlines, many companies are desperate for more workers, particularly technicians. This workforce is in high demand from the auto industry to the Department of Veterans Affairs to nonprofit organizations,” said Robert Frick, business economist at Navy Federal Credit Union.
“The job market is still so tight that many tech workers and workers with other skills are snapped up long before they have to collect an unemployment check. And they’re more likely to be picked up by smaller firms, which have a much greater demand for labor than large corporations.
The tech downturn is an anomaly amid a job market that remains the tightest in decades and has allowed many workers to demand higher wages. Across the economy, announced layoffs fell last year to the second-lowest in 30 years of outplacement firm Challenger’s pursuit, Gray & Christmas, only to 2021.
But even as overall layoffs declined, tech layoffs increased, with a record 1 in 4 tech layoffs last year.
Here are the biggest tech companies announcing cuts since 2022.
Google’s parent company announced Jan. 20 that it was laying off 12,000 employees, or about 6% of its 186,000 global workforce. The cuts apply “to Alphabet – product areas, functions, tiers and regions,” CEO Sundar Pichai said.
Pichai told employees the Silicon Valley company was simply hiring too quickly during the pandemic.
“Over the past two years, we’ve had periods of dramatic growth,” Pichai wrote in an email also shared on Alphabet’s corporate blog. “To accommodate and drive that growth, we hired for a different economic reality than the one we face today.”
The e-commerce company plans to cut about 18,000 jobs, a cut that began in November and will continue into this year. That’s just a fraction of the 1.5 million workers worldwide.
While the vast majority of the company’s employees work in its massive warehousing and logistics operation, which has doubled in size during the pandemic, the cuts will mainly affect employees in some of the company’s less profitable sectors, including the department responsible for the voice assistant, Alex.
The online auto retailer cut about 2,500 employees, or 12% of its workforce, in May 2022. The company has been widely criticized for its handling of the layoffs, many of which have come via Zoom and email.
The Phoenix-based company, which supplies new and used cars to buyers, blamed the cuts on an “automotive recession.”
The cryptocurrency trading platform shed about 20% of its workforce, or about 950 jobs, in January. It’s the second round of layoffs in less than a year, with 1,100 workers losing their jobs in June.
The transport service announced in November that it was shedding 13% of its workforce, nearly 700 employees. The layoffs affect the company’s employees because Lyft considers the army of drivers to be independent companies and not employees of the transportation company.
Facebook’s parent company laid off 11,000 employees in November, about 13% of its workforce. Meta has struggled more than many tech companies this year; its user base has shrunk while CEO Mark Zuckerberg has poured billions of dollars into building what he calls the “Metaverse,” much to the dismay of his investors. The company’s stock has lost two-thirds of its value since its peak in August 2021.
The software company said in January it would cut about 10,000 jobs, nearly 5% of its workforce, as it shifts its strategy toward artificial intelligence and away from hardware. In the two years to June 2022, Microsoft had grown from 163,000 to 221,000 employees.
The company, whose app has helped launch a new generation of investors, announced in August that it would reduce its headcount by 23%, or about 780 employees. This is the second round of recent layoffs for the company, which has shed 9% of its workforce over the past year.
The company cut 10% of its workforce, or about 7,300 employees, in January. It also said it would close some offices, citing a “challenging” environment and lower client spending.
The parent company of the social media platform Snapchat announced in August that it was laying off 20% of its employees. Snap’s workforce has grown to more than 5,600 employees in recent years, meaning that even after laying off more than 1,000 employees, Snap’s workforce would be larger than it was a year ago
The payments processor announced in November that it would lay off about 1,000 employees, or 14% of its workforce. In an email to employees posted to Stripe’s website, CEO Patrick Collison said the company expects “leaner times” given deteriorating economic conditions.
About half of the social media platform’s 7,500 employees were laid off after Tesla’s billionaire CEO Elon Musk took over the service in October. An unknown number have left the company, with some objecting to the new owner and Musk’s call for an “extremely tough” attitude.
The online shopping company announced in January that it would cut 1,750 employees, or about 10% of its global workforce, as it adjusts to falling consumer demand in the wake of the pandemic’s home renovation boom. It’s the second round of layoffs for the Boston-based company, which cut 870 employees in August.
CEO Niraj Shah said the company “just got too big”.
“In hindsight, much like our tech peers, we’ve scaled our spend too quickly in recent years,” Shah said in a statement.