Microsoft and Alphabet have said they want to let go of thousands of employees. This is a big change from the early days of the pandemic when these companies were quickly growing to meet the rising demand for online services.
In January 2021, Microsoft CEO Satya Nadella was optimistic about the shift toward online services. He said, “What we have seen over the past year is the start of a second wave of the digital transformation sweeping every company and every industry.” But two years later, Microsoft said it would lay off 10,000 workers. The decision was taken because businesses were rethinking their digital spending during the pandemic, and the economy was generally uncertain.
Pandemic Bubble burst: Tech Titans Microsoft and Alphabet suffer massive layoffs amid economic struggles
Alphabet did the same thing and said it would cut around 12,000 jobs, more than 6% of its staff. In the past few weeks, other tech companies like Amazon, Facebook, Salesforce, and Twitter have been letting people go.
This change happened because tech leaders seemed to have underestimated how fast growth would continue once people returned to normal lives. Higher interest rates, inflation, and fears of a recession have caused advertising and consumer spending to slow down. This has hurt the profits and share prices of tech companies.
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Refinitiv estimates that Wall Street analysts now expect Google, Microsoft, and Amazon to have single-digit growth in revenue in the fourth quarter. However, Meta, and Apple, will show declines when they report earnings in the coming weeks.
Most of the recent cuts only affect a small part of each company’s total number of workers. For some companies, this cancels out their gains in the past year. But they still have tens or even hundreds of thousands of workers. However, it still changes the lives of many people who now have to look for new jobs.
Scott Kessler, global sector lead for technology, media, and telecommunications at investment firm Third Bridge, said, “They went from being on top of the world to have to make some really tough decisions. To see this dramatic reversal of fortunes… it’s not just the magnitude of these moves but the speed at that they’ve played out. You’ve seen companies make… “
It reminds me that even successful companies can be affected by economic shifts. “It’s a tough time for workers and the companies, but it’s a reminder that the business world is always in flux, and organizations need to be agile to navigate the changes.” It’s tough for workers and industry, but it shows that business is continually changing and that institutions must adapt.
