As they invest in new areas like generative artificial intelligence, tech companies have cut 34,000 jobs.
According to Layoffs.fyi which tracks attrition within the industry, Microsoft, Snap and PayPal each have eliminated hundreds or thousands roles since January. This year, 138 companies in the tech industry have cut staff.
Losses are lower than in 2023, when Big Tech companies such as Meta, Amazon, and Microsoft cut roles after an overinvestment period during the pandemic. According to data from Layoffs.fyi, the tech industry lost 263,000 jobs in 2023.
Analysts say the latest round of layoffs shows companies are reshuffling resources to invest in areas like generative AI, while showing shareholders that they continue to focus on cost discipline.
The tech companies have been evaluating the workforce and concluded that they “have a lot of deadwood”. Brent Thill, Jefferies analyst, said that if the organisation was leaner we could do more. The layoffs will continue, and they may even get worse. It has become contagious.”
Daniel Keum said that companies were reassessing their investment priorities and eliminating positions in non-core, but expensive, divisions. He cited Amazon’s Twitch streaming video platform, which has shed hundreds of employees this year.
Amazon, Microsoft and Meta are just a few of the companies who have indicated plans to achieve a similar balance in 2018. Alphabet, Google’s parent company, Alphabet, Spotify, Microsoft and Amazon all share this goal.
Spotify’s chief executive Daniel Ek said this month that the company needed to be more efficient. He also stated the need to invest some new things.
The widespread cost-cutting last year was a result of the realisation that a shift towards a more digital lifestyle had not lasted beyond the pandemic. This period saw tech companies go on a hiring spree.
Autumn Mitchell, quality assurance tester for Microsoft’s video game subsidiary ZeniMax, said that anyone working in technology or games is concerned about layoffs. You see a company announce layoffs, and you think “Here we go. Who’s next week?”
Keum said that the start of the new year is often the time when employers make their plans for the coming 12 months.
Keum said that the cuts this year were more strategic rather than seasonal. In 2022 and 2023, “right-sizing”, or reducing workforces after the pandemic was implemented. However, in 2024 “active hiring” has been combined with “cuts”.
Meta, the company that has shed more than 20,000 employees since the end of 2022, as investors complained over the billions spent on building the “metaverse,” said in this month’s report that the net additions to its workforce for the year will be “minimal”, despite the fact it is making “significant investments” into generative AI. This would include hiring talent.
SAP, the enterprise software company, announced in January a “companywide transformation”, which will result in the elimination of around 8,000 positions as it focuses more on AI. The company stated that its staff numbers will be “similar” to the current levels by the end of 2024. Derrick Wood, TD Cowen analyst, said that SAP’s announcement shows this isn’t a net loss of jobs but rather a reskilling.
Snap, a photo-messaging firm that is losing money, announced this month it would be cutting a tenth from its global workforce in order to recover after a slump of digital advertising.
Keum said that the Snap example was in response to a “crisis of existence” about whether Snap would still be around after two years. When we speak about Amazon, Meta or Google, these are very different types of layoffs.