In this biweekly newsletter, Roula Khalaf, the FT’s director, handpicks her preferred articles.
This year, technology companies have cut 34,000 jobs as part of workforce restructuring efforts to allocate resources towards innovative fields such as conceptual artificial intelligence to drive their future growth.
Reported by Cutbacks, major players like Microsoft, Snap, Auction, and PayPal have collectively shed hundreds or thousands of positions since the start of the year. This trend was observed by hi, a business attrition tracking platform, indicating that a total of 138 software firms have downsized their workforce.
Compared to the beginning of 2023, the current layoffs reflect a more controlled approach following the excessive hiring spree during the crisis period by industry giants like Meta, Amazon, and Microsoft. In 2023, the technology sector witnessed a significant reduction of 263,000 jobs, as reported by hi.
Analysts note that the recent wave of job cuts signifies a strategic shift towards emerging technologies like conceptual AI while also emphasizing the importance of maintaining cost discipline to shareholders.
Tech companies have evaluated their staffing structures, with Brent Thill, a scientist at Jefferies, stating that streamlining operations could lead to increased efficiency. The ongoing layoffs are expected to continue, signaling potential further reductions in the workforce.
According to Daniel Keum, an associate professor at Columbia Business School, businesses are reallocating resources towards core areas and streamlining non-essential functions, such as Amazon’s Twitch streaming platform, which witnessed significant job cuts this year.
Key industry players like Amazon, Microsoft, Meta, Alphabet (Google’s parent company), and Spotify have outlined plans to achieve a balanced workforce this year.
Spotify CEO Daniel Ek emphasized the importance of investing in innovation to drive future success.
The cost-cutting measures implemented last year were prompted by the realization that the shift to digital-first lifestyles during the pandemic was not sustained, leading to a reversal in hiring trends within the tech sector.
Autumn Mitchell, a quality assurance tester at Microsoft’s ZeniMax gaming division, expressed concerns prevalent among technology and gaming professionals regarding potential layoffs in the industry.
Keum highlighted that significant job cuts often coincide with the beginning of the year when companies outline their strategies for the upcoming fiscal year.
The job losses this year appear to be more driven by geopolitical factors rather than seasonal trends, reflecting a strategic adjustment post-pandemic, with companies engaging in both layoffs and active hiring.
Meta recently announced minimal net personnel changes for the year despite substantial investments in generative AI, focusing on talent acquisition. The company had previously cut over 20,000 jobs since late 2022 amid investor scrutiny over expenditures on developing the “metaverse.”
SAP, a leading enterprise software firm, unveiled a company-wide transformation in January that could result in approximately 8,000 job cuts, aiming to maintain a consistent employee count by the end of 2024. Analysts view SAP’s approach as a shift towards reskilling rather than mere job reductions.
Snap, the struggling photo-messaging company, disclosed plans to reduce its global workforce by 10% in response to challenges in online advertising revenue.
Keum noted that the recent layoffs at companies like Amazon, Meta, and Google reflect existential concerns about their long-term viability, distinguishing them from typical workforce adjustments.
