A Crunchbase report indicates, as of late October, over 52,000 workers in the U.S. tech sector have been laid off in mass job cuts this year. Since the beginning of November 2022, several leading U.S. tech giants announced widespread layoffs and job cuts — including Meta, Stripe, Lyft, Chime, and Twitter.
Hiring Freeze - The Aftermath of Covid
The bigwigs of the tech industry got it wrong. Mark Zuckerberg, founder and CEO of Meta, categorically said that no one predicted the massive boom for digital services during the Covid pandemic would die out. He explained this as the reason for the company sacking 11,000, or 13 per cent of its employees, in 2022.
The tech layoffs in 2022 come right after, or rather during, the Great Resignation, also known as the Great Reshuffle, Great Attrition, or Big Quit. What started as a pandemic-era human resource trend has created an unprecedented churn in the global job market along with the massive layoffs that are underway. The Great Resignation resulted in 48 million people quitting their jobs in 2021 with a further 8.6 million people who quit their jobs in early 2022.
The public and stock markets have been hit hard as the pandemic situation began to stabilize globally. This has inevitably impacted private markets too. Concerns regarding massive inflation on the horizon due to rising interest rates and geopolitical issues have collectively contributed to a very rocky and unpredictable global financial market.
Why A Hiring Freeze Is The Flavour Of The Season
Numerous startups that benefited from the digital pandemic boom are starting to cool down, resulting in a high-pressure business environment. This has severely impacted valuations, especially at the late stage, as startups are finding it difficult to raise new funding in this uncertain economic environment.
Fears of a recession in 2023 have led companies to take tough decisions in a bid to keep businesses running, and founders and investors are preparing for a severe economic downturn.
Usually, a global crisis coupled with changing market conditions causes an economic downturn, even a rescission. And the way things are, with the pandemic and its after-effects on the global economy, it’s safe to say that employers have become more conservative when it comes to their ambitious hiring goals and are now trying to ensure they can at least keep their current workforce.
In May 2022, Y Combinator mentioned in an email to its portfolio founders cautioning them to “plan for the worst.” The startup accelerator also warned them that the economic slowdown would affect “international companies, asset-heavy companies, low margin companies, hard tech, and other companies with high burn and a long time to revenue."
Right now, hiring freezes enable companies to minimize or avoid unnecessary costs to streamline and prepare for the cold economic winter that’s coming up. It’s not just early-stage startups or smaller companies facing the heat; mega tech companies like Meta, Salesforce, and Netflix, have all announced hiring freezes and even layoffs amid rising inflation in a looming bear market with rising interest rates.
With hiring freezes, tech companies will be able to reorganize work teams to achieve greater productivity. These reasons have snowballed into a massive hiring freeze and layoffs among tech giants, including Meta, Twitter, Seagate, Intel, and Amazon. Given that so many job cuts and hiring freezes are uncommon, the industry has been through a rollercoaster.
Tech Companies That Have Laid Off Employees In 2022
To save $3 billion next year, Intel is laying off staff and reducing its spending. CEO Pat Gelsinger told Reuters that a major chunk of savings would come from cutting “people costs.” The company is reducing resources in both operations and sales departments with a target to save $10 billion in costs annually by 2025. Intel has confirmed that it will lay off thousands of workers to cut billions of dollars in spending.
Intel is aligning its strategy as it battles an industry-wide shift in semiconductor availability. The shortages brought about by the pandemic are giving way to overproduction, and this will negatively impact revenues across the chip industry, so these situations call for a re-evaluation of cost and margins.
US-based Coinbase laid off 1,110 workers, around 18% of its total staff, in June after turning back on its own optimistic growth projections citing a crypto winter. 2022 has been a tough year for Netflix too. The company has had two job cuts in May and June, having laid off around 500 employees. Furthermore, the Crypto company cut over 60 jobs in its recruiting and institutional onboarding teams in November. Given the highly volatile nature of the crypto market in 2022 and the recent crash of FTX, mega-crypto firms like Coinbase have had to take the decision to lay off workers.
Apple is also slated to reduce hiring in 2023. In August 2022, it is estimated that nearly one hundred independent recruiter contractors were laid off at Apple. A Bloomberg report suggests that several teams and staff positions will not be renewed next year at Apple. This is a direct impact of the cold economic winter of 2022. IN AN INTERVIEW WITH CBS MORNINGS, Apple CEO Tim Cook recently confirmed that the company is being very “deliberate” when it comes to hiring.
Meta has had a very rocky year after being superseded by the rise of TikTok and its unsuccessful push into the metaverse. CEO Mark Zuckerberg shared the layoff of 11,000 employees, nearly 13% of the company, in a blog post where he accepted he was at fault for over-optimistic growth based on the pandemic-infused digital surge.
“At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth,” said Zuckerberg. “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected.”
Zuckerberg further added that the company would now become “leaner and more efficient”, allocating resources to “a smaller number of high-priority growth areas,” including ads, AI, and the metaverse.
Twitter has been in the news lately ever since Elon Musk took the reins of the social media goliath. However, the news that shook the world was that the company laid off almost half its workforce under new owner Elon Musk, who tweeted that “the company is losing over $4M/day".
According to Platformer’s Casey Newton Twitter, Twitter eliminated around 4,400 to 5,500 contract employees. It is stated that most contract employees were not notified about their termination. Twitter reportedly failed to inform managers about job cuts as well.
The job cuts follow layoffs, and a recent article by The Guardian mentions that Elon Musk’s takeover of Twitter and his demand of employees to sign a pledge to work “long hours at high intensity” has prompted mass layoffs and voluntary resignations.
The Tech Layoffs And The Opportunity For The Freelance Talent
During these times of economic uncertainty, tech companies from around the world are turning to freelancers instead of hiring full-time workers. Platforms like Toptal offer companies of all scales and sizes to hire world-class talent in less than 48 hours. In fact, a recent report suggests the majority (78%) of businesses and tech companies are more likely to engage with freelance talent to fill in gaps in their workforce during times of economic uncertainty. And 8 in 10 business owners said, “independent, flexible talent can help companies during times of economic downturn."