It has been said for some time that one of the most promising areas to work in is technology, where we would find the future of professions. However, several companies — including some of the tech giants — are laying off many of their employees, with the remaining employees at risk of layoffs. THE talent war, in which companies were fighting for the most qualified professionals, seems to have cooled down in this new scenario of uncertainties.
Lots of hiring, massive layoffs
Elon Musk, the new owner of Twitter, halved the company's headcount last week, and the company's founder and former CEO Jack Dorsey took responsibility for the cut. He claims to have hurt employees by increasing the size of the company too quickly.
A Meta, parent company of the Facebook e Instagram, also laid off 11.000 employees — about 13% of its workforce — and Mark Zuckerberg also blamed the exaggerated expansion. In a letter written to collaborators, Zuckerberg states: “I made the decision to significantly increase our investments. Unfortunately, it didn't turn out as I expected.. "
Apparently the "talent war” resulted in a super wave of hiring, without companies seeing the impact in the medium and long term. With the intention of obtaining the best workforce, many professionals were hired with an aggressive compensation package and many benefits, which are now proving unfeasible for the companies' sustainability.
As companies enjoyed soaring profits from the pandemic, they believed expansion would continue and maintained staffing levels. Silicon Valley companies have long viewed hiring as more than just filling vacancies. The Talent Wars, which are even seen as fierce, showed that companies like Google e Meta were winning the best and brightest professionals.
Teams full of geniuses and a long reign at the top of the most wanted jobs lists for college grads were emblems of growth, deep pockets and prestige. And for employees, work became something that would go beyond a job — it would even become an identity. Now, these practices are causing a certain “indigestion” to the technology industry.
When times are good, you have excesses, and excesses lead to over-hiring and optimism. In the last 10 years, an abundance of money has led to an abundance of hires.
Josh Wolfe, Lux Capital investor on the many technology hires
Effect of the COVID-19 pandemic
More than 100.000 tech workers lost their jobs in 2022 according to layoffs.fyi, a website that tracks layoffs. Cuts range from well-known publicly traded companies such as Meta, Salesforce, Booking.com e Lyft, to highly valued private startups such as the delivery service gopuff and financial platforms Chemistry e Brex.
Many of the layoffs took place in the more experimental areas of technology. the rocket company Astra cut 16% of its staff this week after tripling its headcount last year. In the cryptocurrency sector, which has suffered a meltdown this year, high-value companies including Crypto.com, Blockchain.com, OpenSea e Dapper labs have cut hundreds of workers in recent months.
Tech leaders have been too slow to react to signs of an economic slowdown that have emerged in recent months after many of the companies had been hiring for several years, tech analysts said.
A Meta, whose market value has surpassed $1 trillion, has doubled its staff to 87.314 people in the past three years. Robinhood, the stock trading app, expanded its workforce nearly six times between the years 2020 and 2021.
For many this is a moment of shock. The times that the “we're in a bubble” reaction has occurred in the tech industry over the past decade, they have always been short-lived, followed by a quick return to even more profitable good times. Even those who predicted that the pandemic behaviors made possible by companies like Zoom, Peloton, Netflix e Shopify would decrease now say they underestimated the extent.
Others already believe that this slowdown will last longer because of the macroeconomic factors that created it. In recent years tech companies have responded to the flood of cash from investors and well-known startups, pouring money into expansion through sales and marketing, hiring, acquisitions and experimental projects. Excess capital encouraged companies to hire staff, fueling the Talent War.
Now for the workers
This has led to the tech industry earning a reputation for corporate bloat. Rumors often circulated of highly paid workers working just a few hours a day or juggling multiple remote jobs at the same time, along with the perks companies offer such as free laundry, massages, and even cafeteria chefs.
In recent weeks, Meta has reduced the benefits offered to employees, including the laundry service. Once upon a time, tech workers could quickly change jobs if they were cut because of the plethora of open positions, but according to Eric Rachlin, an entrepreneur who co-founded the company Body Labs, it is not known if everyone on this wave of layoffs will be able to do this currently.
Amidst the chaos created by the layoffs, investors can still see an opportunity. They are quick to point out that well-known successes of the last decade—referring to companies like airbnb, Uber e dropbox, which were created after the Great Recession. Meanwhile, there may be more layoff announcements — delivered via the now-standard form of a letter from the chief executive posted on a company blog. It's good to keep an eye out!
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Elon Musk warns of bankruptcy risk Twitter to employees.
Source: The New York Times.
