Big Tech job cuts: what's going on?

Over the last year, it seems like all we hear is negative news when it comes to the state of the economy and business outlook. It’s no surprise; times are hard and this affects every business out there.

However, tech companies seem to have had it particularly hard since the pandemic ended and the economic crisis took over. This is evident from the sheer number of layoffs reported in the mainstream press.

The very nature of tech companies is that they grow fast, sometimes too fast for recruitment to keep up with. As such, they bring on board new employees one after the other to maintain momentum. 

But that rapid growth trajectory can't last forever.

Faced with a recession and rising costs, a lot of tech firms realised that they had far more employees than they needed. And needed to cut costs.

The most obvious way to do that is to cut the workforce. As sad as that is for employees, it’s a common theme.

To highlight how big this problem really is in the tech world, let’s take a look at some of the most notable layoffs over the last six months and try to work out why. 

It's not an exhaustive list but does provide some idea of the scale of the problem.

Tech firms that let staff go and why

iRobot: 140

The robot vacuum company announced job cuts on the same day it was bought out by Amazon. Cost savings was the reason given for cutting 10% of the workforce.

Groupon: 500

Across departments, equating to about 15% of the total workforce. Groupon said they wanted to focus on self-service options.

Nutanix: 270

Nutanix is a San Francisco cloud software firm. They gave no reason for the layoffs, but cost savings was the assumed reason.

Microsoft: 11,200

Microsoft recently announced that it will let 10,000 employees go, citing economic uncertainty as the reason why. Though, some say it's also a consequence of overhiring during the pandemic.

That's on top of the 200 staff in August and 1,000 staff in October 2021. The Modern Life Experiences team was the first to be cut, and then teams related to the Xbox, Edge, and Devices. 

Peloton: 4,000+

Peloton laid off 780 staff in August and then another 500 staff in October - Previous to this, the company had cut another 2,800 roles. The CEO stated that the end of the pandemic caused sales to slump as people moved out of their homes and away from their static bikes.

Apple: 100

Several regions were affected by the job cuts but mostly in contractor roles. The CEO announced that a harsh economic environment contributed to the cuts but that the company would focus on growth.

Meta: 11,000+

Meta cut 60 contract workers in August/September before another 11,000 cuts occurred in November. That's approximately 10% of the workforce. Mark Zuckerberg admitted that he had overestimated growth post-pandemic.

Snap: 1,280

Snap, which owns Snapchat and other apps, laid off 20% of its workforce. Again, the post-pandemic downturn is thought to be behind the cuts.

Twilio: 850

Twilio is a cloud communications provider and the CEO explained the cuts by stating that the company could now run more efficiently.

Klarna: 100

This is the second round of cuts for Klarna within a year and is thought to be due to fewer people shopping thanks to the economic downturn.

Intel: 20% of staff

While official numbers are not available, Intel announced a huge workforce cut in order to help them reduce costs by $10 billion by 2024.

Twitter: 3,700

After Elon Musk purchased Twitter, an immediate cull occurred, with many staff being informed by email on a Friday evening. Cost savings are thought to be behind the decision but Musk indicated there would be a large workforce evaluation post-takeover.

Amazon: 10,000

Christmas and the New Year weren’t jolly for Amazon staff, with many retail, HR and AI positions cut in November 2022 and January 2023.

Roku: 200

After bidding goodbye to 5% of their workforce, Roku blamed a poor economy for the situation.

Cisco: 4,000

After an initial boost in revenue, Cisco chose to reduce the number of staff to rebalance and identify potential cost savings.  

HP: 4,000+

Again, the company didn’t want to disclose the exact number, but it is thought to be between 4,000-6,000 staff. HP wants to save $1.4 billion by the end of 2025, blaming poor sales post-pandemic. 

That’s a huge amount of jobs lost, isn’t it? It’s surprising when you consider how huge these companies are and how much market share they enjoy.

However, it just goes to show that even the biggest companies in the world aren’t immune to economic issues. 

Tips to avoid mass job cuts

It’s easy to look at these figures and feel bad for the people involved, but the truth is this can happen to any business without proper planning.

In some situations, there is nothing that can be done. Nobody predicted a world pandemic that shut down many industries and a post-pandemic economic downturn on this scale.

But there are some things we can learn from the fate of these huge tech companies. We hope the tips below will help you avoid the same thing happening to your business.

1. Try to anticipate problems before they arise

There's an argument that all businesses should have a business continuity plan in some shape or form; this outlines how the company will continue to operate in the event of an unplanned disruption.

A risk assessment is certainly a great tool to use here as it will give key information about the ‘what ifs’ and allow you to put a plan into place should that worst happen.

2. Keep one eye on the economy and the other on your company

For rapidly scaling startups, any sign of slowing down will sound alarm bells. But let's face it, a high-growth trajectory won't last forever.

If (or when) things start to slow down, seize it as an opportunity to evaluate the company's position, performance and competition.

Keeping a close eye on the economy and understanding your business allows you to plan ahead and understand what you may need to do. For example, a recruitment freeze might be the right call.

Points one and two really are about building resilience (and being sensible).

3. Build the best management team

Who will steer your team through hard times? You want to be able to trust anyone in a senior position to make the right call.

An effective manager weighs up everything before making a decision. But a great manager should also possess the people skills to have difficult conversations. For instance, in extreme cases, budget cuts or pay cuts could be on the cards.

4. Develop a solid retention strategy

Layoffs are damaging on so many levels - to the team's morale, your company's reputation and your bottom line.

Employees saying goodbye to one colleague after another will understandably be concerned about their position and the company's survival.

Mass job cuts, unsurprisingly, are a huge red flag to investors and future applicants. And replacing one employee alone could cost you tens of thousands of pounds!

So where possible, you want to hold onto your experienced and highly skilled employees. A good way to do this is to put together a solid retention strategy including benefits for employees.

Believe it or not, this starts at the very beginning. An effective onboarding process is key. And not a super complex or lengthy onboarding process - an effective process.

If a new starter fails to get the support and training they need from the get-go, they may leave before the end of their probation. 

Then there's the challenge of truly understanding what your staff want and need. Companies that crack this demonstrate that they care about their employees - that they’re not just another number. 

There are various ways to do this including employee engagement surveys and regular one-to-ones and reviews. 

You could also look at share schemes for employees.

Employees with a slice of the pie feel like they're part of something bigger than themselves. And are incentivised to stick around for longer. It's known as the Ownership Effect.

Book a free consultation to find out more.

All companies go through hard times and none are immune to the impact of an economic downturn. That being said, it’s important to do what you can to avoid situations like the Big Tech firms have found themselves in.

Look for growth opportunities, by all means, but always keep one eye on the horizon, and brace your business for any negative events that could come your way.