After years of rapid expansion bubbled by an exponential rise in demand post-Covid, a hiring spree was seen among all major global tech firms and startups. But as the dust settles down, experts say that tech companies are coming off a period of outsized growth, and we are seeing a self-correction in the market — with macroeconomic factors such as the Ukraine-Russia conflict combined with an air of an upcoming slow-down — plummeting consumer demands.
Though the reasons behind the market value loss remain debatable, the phenomenon is widespread and has impacted all global tech giants, forcing them to rethink their predictions about their massive valuation and bullish investment thesis against market headwinds.
Amazon has announced that it is pressing a pause on corporate hiring. “With the economy in an uncertain place and in light of how many people we have hired in the last few years, Andy and S-team decided this week to pause on new incremental hires in our corporate workforce. We had already done so in a few of our businesses in recent weeks and have added our other businesses to this approach,” said Beth Galetti, Amazon's Senior Vice President of People Experience and Technology, in November.
Apple has paused hiring for many jobs outside of research and development, an escalation of an existing plan to reduce budgets heading into next year, according to people with knowledge of the matter.
Netflix, grappling with slowing growth and increased competition, laid off 300 employees (about 4 per cent of its workforce) in the second round of job cuts, Reuters reported in June. “While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth," Netflix said in a statement.
Twitter earlier had laid off about half of the workforce globally and more than 150 employees were affected in India by its layoffs to cut additional costs.
What is driving layoffs at tech companies?
The biggest reason behind layoffs is the economic slowdown which has resulted in reduced consumer demand for tech platforms and services, further engraved by the Ukraine-Russia conflict.
The other factor is the performance of tech companies in the second quarter of this year. Companies have fallen short of their predicted expectation, as indicated in the case of Amazon, whose stocks plummeted by more than 50 per cent YoY in November, making it the world’s first company to lose more than $1 trillion in market value.
The possibility of recession has resulted in tech companies looking deeply at their top and bottom line, resulting in cutting costs and expenses resulting in mass layoffs.