Real Reason Behind Mass Layoffs At Big Tech Companies in US

Twitter, Microsoft, Google, IBM, Amazon, all the big Tech companies in the US are having mass layoffs. Could it have something to do with the gigantic enhancement of AI?

Above 150,000 employees lost their jobs in recent months. There can be several reasons behind that, but the most shocking news is that these employees not only included inefficient staff but also people who have served these companies for more than 10 years! Think about that, if these so experienced employees were not beneficial for the company, why did they last this long?

What major indications are we getting from this? It certainly isn’t about money. Microsoft has recently made a huge investment of $10 Billion in OpenAI while cutting off 50,000 jobs combined with Meta, Alphabet, and Amazon.

Talking about Twitter who has recently got Elon Musk as its new owner has let go half of the employees including all the Board members, top executives as the last CEO Parag Agrawal becoming sole owner of Twitter. He stated it’s because the company was losing $ 1Mn per day and the previous owners were obviously over-paying.

Before moving to the reasons behind the mass layoff in Tech companies, let us see how many employees got fired from each company.

Major Layoffs in the US tech companies

Microsoft reported a lay off of around 10,000 employees. Alphabet, Google’s parent company has announced plans of cutting off 12,000 Tech workers, the cut will be approx. 6%. Amazon, Alphabet, Meta, Microsoft together have killed 50,000 jobs whereas Twitter’s new owner Elon Musk fired half of the company’s employees which is around 3,500 people. Accenture fired 19,000 employees, that is, 2.5 % of our current workforce. Meta alone has laid off 11,000 employees and Alphabet has cut off 10-15,000 workforce.

The International Business Machines Corporation (IBM) laid off 3,900 employees. Spotify is cutting off 600 jobs (6% of its global workforce) HP also announced plans to cut up to 6,000 jobs by the end of the fiscal year 2025. In addition to that, companies like CoinBase, Netflix, SalesForce, Snapdeal, etc. are also cutting the majority of jobs in the US tech sector.

Now the question arises why are these companies having these layoffs? Let’s look into some reasonable circumstances.

Reasons behind the Layoffs in Tech companies recently

There can be many reasons behind the major layoff in tech companies even when it is growing at light’s speed. Starting with the fact that Apple’s recent policies have affected the revenue of various companies. It has recently restricted social media and ad companies from taking user’s data without their permission. It has led to a significant loss in their business.

Second reason can be the Russia-Ukraine War. Next reason can be that in the pandemic, the Tech companies undergo a hiring-spree, buoyed by record revenues. Salaries hit record level as the competition for talent boosted up and there were news of lavish perks and benefits all over the internet. But as their emails indicate, there has been an issue with their estimations and cuts show a winding-back of recruitment policies coming back on track since the COVID-19 pandemic. People shifted their patterns back to pre-Covid times which was somehow unexpected for them.

Now why the sudden realization all of a sudden altogether? That is because of the US Quarter 3 (July-September) that represented a dip in revenues of many companies. Amazon experienced a dip in their revenues 1st time in Quarter 3 and so did Meta. This can be one of the reasons why all of the companies are laying off at the same time.

One most shocking news we see is that the employees losing their jobs were not only just the freshers and newcomers but also people who have served the company for over 10 years. This can be due to the fact that more experience means higher salary, and their motive was to cut the cost eventually so why not let go of higher executives? This could help companies reach their financial goals.

What are those experiences employees doing now?

Indeed estimates show that less than 10% of these employees are looking for jobs right now. It is very much possible that a major chunk of these employees may open up their own ventures or go for freelancing which would pay even higher than a job ever would. Or some of them may have just wanted to take a little career break. Maybe once this phase gets over they may get re-hired which right now is highly unlikely.