Image source: European CEO
Pandemic: The onset of the pandemic two years ago tipped the balances in Microsoft’s favor, according to CEO Satya Nadella.
As a byproduct of its online services, Microsoft thrived.
“What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry,” said Nadella.
Starting in 2023, the situation is very different from what it was in 2021.
Microsoft said last week that 10,000 employees will be let go.
The company stated that it is reevaluating its digital spending from the pandemic era as it struggles with economic uncertainties.
According to Nadella, Microsoft customers are aiming to accomplish “more with less.”
The tech space
Microsoft is not the only company to undergo such a course; other companies have also been firing staff.
Google’s parent company, Alphabet, has revealed plans to fire 6% of its workers (around 12,000 jobs).
Since October, many large firms, including Amazon, Google, Meta, and Microsoft, have decided to release news more than 50,000 workers.
The choices are at odds with the early phases of the pandemic, when tech companies were expanding to meet surging demand.
At the time, a lot of market players thought the expansion would continue for a long period.
However, since about September 2019, Amazon has more than doubled the company’s workforce.
They employed over 500,000 people while constructing new warehouses.
The number of employees at the massive social media business Meta more than doubled between March 2020 and September of the previous year.
Other companies that have grown their workforce include:
- Microsoft
- Salesforce
- Snap
The aforementioned companies have also disclosed additional layoffs in recent weeks.
Read also: MacBook to get boosts with newer, faster chips
Error in judgment
Most tech executives miscalculated the pandemic’s spread, especially in light of how many people went back to their regular lives and offices.
There are several reasons why consumer spending and advertising have fallen recently, including:
- Recessionary fears
- Inflation
- Increasing interest rates
Wall Street analysts are now predicting single-digit profit growth for a handful of firms in the critical December quarter.
According to Refinitiv estimates, Apple and Meta are expected to see dips.
Recent staffing cutbacks typically only affect a small percentage of the entire workforce.
Others retain tens of thousands (or maybe hundreds of thousands) of personnel while eliminating gains from the past year.
However, it interferes with the lives of employees who are currently seeking for new jobs as a result of their company’s apparently unending growth.
Pandemic growth
Scott Kessler, the global sector lead for investment firm Third Bridge, shared his opinions on the current developments and early growth of the tech sector.
“They went from being on top of the world to having to make some really tough decisions,” said Kessler.
“To see this dramatic reversal of fortunes… it’s not just the magnitude of these moves, but the speed that they’ve played out.”
“You’ve seen companies make the wrong strategic decisions at the wrong times.”
Apple is still the only prominent technology company that has not made any layoffs public.
The firm reportedly put a hiring freeze in place, with the exception of R&D (research and development).
Compared to other companies, Apple has only boosted employment by 20% over the last four years.
“They’ve taken a more seemingly thoughtful approach to hiring and overall managing the company,” noted Kessler.
Meanwhile, tech CEOs have acknowledged that they misjudged by bringing in too many employees at the onset of the pandemic and by failing to foresee the increased demand that followed the removal of the pandemic’s restrictions.
On Friday, Pichai accepted responsibility for Alphabet’s layoffs and pledged to redirect the company’s focus to its core business operations.
On Friday, he sent an email to the workforce, and it was later posted on the company website.
“The face that these changes will impact the lives of Googlers weighs heavily on me,” Pichai wrote.
“I take full responsibility for the decisions that led us here.”
Aftermath
None of the major corporate CEOs’ titles or salaries don’t seem to have changed as a result of the layoffs.
Scott Kessler predicts that the tech layoff announcements will likely continue during the upcoming earnings season despite all the economic concerns.
Businesses that haven’t yet experienced these effects may soon opt to do so by reducing their workforces.
Kessler noted:
“I think there is an element of [some companies], saying ‘We might not see this right now but all these other big companies, these companies that we compete with, that we know, that we respect, are taking these kinds of actions, so maybe we should be thinking and acting accordingly.”
