Tech firms have slashed nearly 100,000 jobs this year

Technology companies have laid off nearly 100,000 employees so far this year as they desperately try to cut costs.

On another dismal day, Ebay became the latest online giant to trim its workforce, announcing plans to lay off 500 staff, or about 4 percent of its workforce.

Jamie Iannone, CEO of the platform best known for selling second-hand goods, said Ebay wanted “additional room to invest and create new roles in high-potential areas” in the face of economic uncertainty.

The announcement is just the tip of a very large iceberg. In recent weeks, Google parent company Alphabet, Amazon, Zoom, Microsoft and Salesforce have all made significant budget cuts following pandemic hiring.

‘Companies that last a long time go through different phases. They’re not in heavy-duty expansion mode every year,” Amazon boss Andy Jassy told staff after announcing the largest cull in its history.

“This year’s assessment was more difficult given the uncertain economy and the fact that we have hired people quickly in recent years.”

Similarly, pandemic darling Zoom, which boomed during the lockdown as millions of people worked from home, said it would cut 15 percent of its workforce.

In a note to ‘Zoomies’ this week, CEO Eric Yuan said he was ‘responsible’ for mistakes and would cut his £911,000 salary by 98 per cent to prove it.

Zoom is struggling to thrive in the post-pandemic world as economies reopen and people return to the office to meet friends and family in person.

More than 98,000 people have been laid off since early 2023, on top of the 159,786 laid off in 2022, according to data tracker Layoffs.fyi.

Social media giants Snapchat and Facebook owner Meta were among the first to go under last year. They felt the pain of shrinking ad budgets and a Nasdaq sell-off of tech due to rising US interest rates that cast doubt on their skyrocketing valuations.

A bridge too far: Many of America’s largest tech companies are based in San Francisco (pictured)

Danni Hewson, a financial analyst at AJ Bell, said companies now want to follow Apple, which she says has achieved the “Goldilocks hiring scenario” by hiring “not too much, not too little, but just the right number.” ‘.

While Apple’s situation is helped by privacy changes in 2021 that made it harder for rivals to track user behavior and then hit key revenue streams, Hewson says companies will look for their own magic formula.

Victoria Scholar, an analyst at Interactive Investor, said layoffs had boosted stock prices.

“Following last year’s tech wreck, investors are encouraged by Big Tech’s recent response to layoff staff in an effort to slam the shutters in preparation for a period of economic weakness,” she said.

“This is exposed by the performance of technology stocks so far this year, with Meta, Microsoft, Alphabet and Amazon posting double-digit percentage gains since early January.”

The feeling is that these decisions are a step that had to be taken to finance the future.

For example, Uber laid off thousands of employees during the pandemic, as its taxi company went under and its food delivery business boomed.

It posted its “strongest quarter ever” yesterday and has said it won’t make any major headcount changes this year.

Dan Ives, an analyst at investment bank Wedbush, said that while companies are cutting costs, money will be redistributed into funding innovation such as artificial intelligence.

He said, “It’s a two-city story for Silicon Valley. On the one hand, companies overhired during the pandemic, and then the clock struck midnight on hypergrowth and we see layoffs.

On the other hand, we are seeing an AI arms race worldwide in the US and China, and Microsoft’s ChatGPT deal was the first shot in this battle.”

Tech expert Matt Navarra said there is a “realignment of the deck” to focus on generative AI and the metaverse – two areas that could reinvent the tech world.

As more companies swing the axe, the question remains: When will these cuts end and who and what will come out on top?