Tech companies keep slashing jobs in uncertain 2023 economy

The tech industry is slashing jobs at a pace nearing the early days of the Covid-19 pandemic. In November, the most recent month for which data is available, the sector announced 52,771 cuts, for a total of 80,978 this year, according to consulting firm Challenger, Gray & Christmas Inc. It was the highest monthly total for the industry since the firm started keeping data in 2000.

After a bumpy start to the pandemic in 2020, tech companies benefited from a boom in e-commerce spending and remote work boomed, triggering a hiring spree. Now, things look different. In recent earnings reports, Alphabet, Meta, Microsoft and others missed estimates, sending shares plunging. For Amazon.com and Salesforce, the outlook seems to be worsening as they pursue deeper layoffs at the start of 2023. Other companies are reckoning with volatile cryptocurrency markets or a sudden slump in demand. 

There’s a job-market riddle at the heart of the next recession

Here’s a running list of who’s cutting jobs and pulling back on hiring. 

Amazon

The e-commerce titan is laying off 18,000 employees, CEO Andy Jassy announced on 4 January. The cuts, which started last year, were initially planned to affect about 10,000 jobs.

“Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,” Jassy said. “These changes will help us pursue our long-term opportunities with a stronger cost structure.” 

In November, Amazon halted “new incremental” hiring across its corporate workforce. 

Apple

The iPhone maker has paused hiring for many jobs outside of research and development, an escalation of its plan to reduce budgets heading into next year, according to people with knowledge of the matter. The break generally doesn’t apply to teams working on future devices and long-term initiatives, but it affects some corporate functions and standard hardware and software engineering roles.

Adobe

Adobe has eliminated about 100 jobs, concentrated in sales. The company shifted some employees to other roles internally.

Chime

The digital-banking startup Chime Financial is cutting 12% of its staff, or 160 people. A spokesperson said the company remains well-capitalised and the move will position it for “sustained success”.

Cisco

Cisco Systems is beginning a restructuring plan that will affect about 5% of employees. The company says it will incur pre-tax charges of about $600-million for severance, termination and other costs. The employees will be given a chance to move to other jobs within the company, CFO Scott Herren said in an interview. 

“This is not about reducing our workforce – in fact we’ll have roughly the same number of employees at the end of this fiscal year as we had when we started,” Herren said. Cisco had more than 83,000 employees as of July 30.

Coinbase

Coinbase Global is eliminating 60 positions as the cryptocurrency market slumps. The crypto exchange announced in June it would lay off 18% of its workforce, or roughly 1,200 employees.

Dapper Labs

Dapper Labs founder Roham Gharegozlou said in a letter to employees that the company had laid off 22% of its staff. He cited macroeconomic conditions and operational challenges stemming from the company’s rapid growth. Dapper Labs created the NBA Top Shot marketplace for nonfungible tokens, a digital asset class that has seen a steep drop in demand since the crypto market downturn.

Digital Currency Group

Cryptocurrency conglomerate Digital Currency Group embarked on a restructuring last month that saw about 10 employees exit the company. As part of the shake-up, Mark Murphy was promoted to president from chief operating officer.

DoorDash

DoorDash is cutting about 1,250 jobs, acknowledging that its rapid expansion during the pandemic has led to mounting losses. The cuts will affect about 6% of the company’s workforce, a mix of US and non-US based staff, according to reporting by Bloomberg.

“While our business continues to grow fast, given how quickly we hired, our operating expenses – if left unabated – would continue to outgrow our revenue,” CEO Tony Xu wrote in a letter to staff.

Galaxy Digital

Galaxy Digital Holdings, the crypto financial services firm founded by billionaire Michael Novogratz, is considering eliminating as much as 20% of its workforce. The plan may still be changed and the final number could be in a range of 15% to 20%, according to people familiar with the matter. Galaxy’s shares have plummeted more than 80% this year, part of a rout for cryptocurrencies.

HP

HP Inc. will cut as many as 6,000 jobs over the next three years as declining demand for personal computers cuts into profits. In addition to reducing its workforce by about 10%, the company will reduce its property footprint. 

Intel

Intel is cutting jobs and slowing spending on new plants in an effort to save $3-billion next year, the chipmaker said. The hope is to save as much as $10 billion by 2025, a plan that went over well with investors, who sent the shares up more than 10% on 28 October. Bloomberg News reported earlier that the headcount reduction could number in the thousands. 

Kraken

The crypto exchange Kraken is laying off 30% of its workforce as the fallout from this year’s digit-asset market meltdown worsens. The cuts account for about 1,100 people.

Lyft

Lyft’s cost-saving efforts include divesting its vehicle service business. It’s eliminating 13% of staff, or about 683 people. The company had already said it would freeze hiring in the US until at least next year. It’s now facing even stiffer headwinds. 

“We are not immune to the realities of inflation and a slowing economy,” co-founders John Zimmer and Logan Green said in a memo. “We need 2023 to be a period where we can better execute without having to change plans in response to external events – and the tough reality is that today’s actions set us up to do that.”

Meta

The Facebook parent is cutting 11,000 jobs, the first major round of layoffs in the social-media company’s history. Meta’s stock has plunged this year, and the company is trying to pare costs following several quarters of disappointing earnings and a slide in revenue. The reductions equal about 13% of the workforce, and Meta will extend its hiring freeze through the first quarter. 

“I want to take accountability for these decisions and for how we got here,” CEO Mark Zuckerberg said in the statement. “I know this is tough for everyone, and I’m especially sorry to those impacted.”

Opendoor

Opendoor Technologies said that it’s laying off about 550 employees – roughly 18% of its headcount. The company, which practises a data-driven spin on home-flipping called iBuying, is coping with slowing housing demand because of higher mortgage rates.

Peloton

Peloton Interactive laid off 500 employees globally, or about 12% of the workforce, in October. It was the fourth time this year the company has cut staff. Along with other expense reduction measures, Peloton said the move will help it reach the break-even point on cash flow by the end of fiscal 2023.

“I know many of you will feel angry, frustrated and emotionally drained by today’s news, but please know this is a necessary step if we are going to save Peloton, and we are,” CEO Barry McCarthy said in an October memo. “Our goal is to control our own destiny and assure the future viability of the business.”

Plaid

Plaid cut 260 staffers to reduce costs. The fintech company will provide 16 weeks of severance and accelerate equity grants for some employees, CEO Zach Perret said in a memo to staffers. 

Qualcomm

Qualcomm Inc. said that it’s frozen hiring in response to a faster-than-feared decline in demand for phones, which use its chips. It now expects smartphone shipments to decline in the double-digit percent range this year, worse than the outlook it gave earlier.

Salesforce

Salesforce will cut about 10% of its workforce and reduce its real estate holdings, according to a regulatory filing on 4 January. CEO Marc Benioff said in a letter to employees, “We hired too many people” during the pandemic. The software company had about 80,000 employees. 

Seagate

Seagate Technology Holdings, the biggest maker of computer hard drives, said that it’s paring about 3,000 jobs. Computer suppliers, including Seagate and Intel, have been hard hit by a slowdown in hardware spending. Customers are sitting on a pile of extra inventory, hurting orders and weighing on Seagate’s financial performance, CEO Dave Mosley said. That necessitated cuts. “We have taken quick and decisive actions to respond to current market conditions and enhance long-term profitability,” he said.

Stripe

Payments company Stripe, one of the world’s most valuable startups, is cutting more than 1,000 jobs. The 14% staff reduction will return its headcount to almost 7,000 – its total in February. Co-founders Patrick and John Collison told staff that they need to trim expenses more broadly as they prepare for “leaner times”.

Twitter

The upheaval at Twitter has more to do with its recent buyout – and the accompanying debt – than economic concerns. But the company has suffered some of the deepest cuts of its peers right now. Elon Musk, who bought Twitter for $44-billion, eliminated about 3,700 jobs by email. Musk also reversed the company’s work-from-anywhere policy, asking remaining employees to report to offices.

“Regarding Twitter’s reduction in force, unfortunately there is no choice when the company is losing over $4m/day,” Musk tweeted on 4 November.

Upstart

Upstart Holdings, an online lending platform, said in a regulatory filing it cut 140 hourly employees “given the challenging economy and reduction in the volume of loans on our platform”.

Vimeo

Vimeo announced it will cut 11% of its global full-time workforce, according to a 4 January regulatory filing. BM/DM