Is The Global Layoff Season Reversing The Pandemic Hiring Spree?

Tech firms went on a hiring spree during the pandemic, each vying to garner the best talent worldwide. Software engineers were in great demand and often lured with luscious rewards. Profits soared, and the industry sentiment was that one big party was on and would never end.

But a fact of life is that one must go home when the party’s over!

With the end of the pandemic, nearly 200,000 tech employees have been laid off since the beginning of 2022. Alphabet, Amazon, Meta, and Microsoft – have announced a total of over 50,000 job cuts in recent months, and this is an indicator gleaned from the world’s four largest tech companies. Even after notable cuts, the largest tech companies are still giants.

They increased the headcount by leaps during the pandemic, adding tens of thousands of workers. The layoffs announced in recent weeks reverse a fraction of the onboarding done in recent years.

In announcing the layoffs to employees, industry leaders appeared apologetic. They expressed the inevitability of taking such an extreme step. They admitted to errors in judgment, rapid hiring, and zealous expansion.

The top executives indicated economic factors, worsened by inflation, workforce levels, and investments they want to make in the future, prioritizing what matters most to customers and the long-term health of businesses. They stated that this year’s review has been more difficult given the uncertain economy.

Pandemic Boom

During Covid-19, the world rapidly went online, and e-commerce revenues surged. Many predicted that the boom would endure beyond the pandemic. Most tech companies decided to increase their investments significantly.

Unfortunately, this did not play out the way everyone expected. Post-pandemic, the scenario changed, and tough times arrived. It was lucid that the market was doing more with less. But the recent staff cuts pale compared to the frenzied hiring for most of Covid-19. In many cases, the layoffs will rewind the clock for only about a year.

The Aftermath

Reductions at Meta Platforms Inc. and Salesforce Inc. will take each company back near end-of-2021 staffing levels. During the pandemic, Meta had nearly doubled in size, and Salesforce had added over 30,000. Inc., which began a new round of cuts, will ultimately affect 18,000 jobs and will be left with more corporate employees than before Covid.

Microsoft Chief Executive Officer Satya Nadella told a crowd in Davos that the tech industry needed to be more efficient as it adjusted to lower demand. However, he expressed confidence that tech spending would accelerate after the current economic crisis.

And suppose Microsoft’s big bet on the future — the acquisition of the video game publisher Activision Blizzard Inc. — is allowed to close. In that case, it will come with 10,000 workers, essentially canceling the disclosed layoffs.

Cisco Systems Inc. Chief Executive Officer Chuck Robbins also took the stage at Davos, saying there is more economic optimism in the air than many World Economic Forum attendees had expected. Robbins said the Cisco job cuts announced in November were about accelerating investment in cybersecurity.

“We’ll actually exit this fiscal year with more people than we entered it — or close to the same,” Robbins said when asked if more layoffs were coming across the tech industry.

Salesforce co-CEO Marc Benioff was at Davos, too. After taking steps to pare back the company’s workforce this month, Salesforce will probably hit pause on acquisitions like Slack and Tableau that brought thousands of new workers.