The big resignation is turning into a forced resignation.
Thousands of layoffs in the tech sector, compounded by a hiring freeze and a slowdown in hiring, highlight the abrupt change in fortunes in recent months due to runaway inflation, fear of stagflation and recession, supply chain disruptions, war in Ukraine, a troubled stock market and other red alert economic factors.
The latest blows came on Tuesday, when Coinbase Global Inc. COIN,
announced an 18% layoff of about 1,100 people and real estate brokerage Redfin Corp. RDFN,
said it would reduce its workforce by about 470 people, or 6% of its workforce.
Read more: Redfin to cut 470 jobs, stock plummets to record high
“Everyone has to batten down the hatches. We are in stormy, stormy seas with choppy weather on the horizon,” media titan Jeffrey Katzenberg, board member and investor in cybersecurity startup Aura, told MarketWatch.
In recent weeks, a wide range of companies across industries have announced layoffs or plans to limit hiring in the economic melting pot. In addition to Coinbase and Redfin, Peloton Interactive Inc. PTON,
PayPal Holdings Inc. PYPL,
Tesla Inc. TSLA,
and others have said they intend to cut staff. At the same time, some of the biggest tech players – Facebook’s parent company Meta Platforms Inc. META,
INTC from Intel Corp.,
Customer Computing Group, Microsoft Corp. MSFT,
Uber Technologies Inc. UBER,
and Lyft Inc. LYFT,
— slow down or freeze hiring.
In total, at least 15,000 tech-related jobs have been or will be cut, according to Layoffs.fyi, a website that tracks job cuts at startups.
“ “The aggregate market capitalization of approximately 300 publicly traded technology companies with operations in San Francisco and the Valley is at its lowest level, $9.98 trillion, since 2013 after peaking at nearly $15 trillion. in November 2021.””
Falling spending on PCs, tablets and advertising has only deepened the uproar, and there are rumors that even cloud computing – which has led a wave of internet expansion over the past decade – could be ‘flatten. All of this has contributed to a convulsive shift from hiring frenzy to belt-tightening, especially among startups.
“The last three years have been difficult with the pandemic, and two more to come with [economic] headwinds,” Starz chief executive Jeffrey Hirsch told MarketWatch.
The effect was most pronounced among Silicon Valley startups, according to local economists. “With the uncertainty of the recession, a slowdown in near-term demand and perhaps more rate hikes, there will naturally be a pause for startups and, in the short term, for very large players,” Stephen Levy, director and senior economist at the Center for Continuing Study of the California Economy, told MarketWatch.
Diminished prospects and a choppy market have already delayed startups’ IPO dreams. For large companies, the impact is more subtle. Major expansion is still underway for Google in Mountain View, CA and San Jose, and for Meta in Menlo Park, CA, and nearby Moffett Park, but it remains to be seen if they will fill those facilities with people. as quickly as originally planned. “It may take them longer, maybe 12 months, before things pick up for big tech,” Levy said.
Representatives of the biggest tech companies are mostly silent on their hiring plans, although Amazon.com Inc. AMZN,
said it was aggressively adding staff. “With tens of thousands of corporate and technology positions currently available, we continue to seek talented people to help us build the future of retail, robotics, healthcare, devices, cloud computing, etc.” Amazon spokeswoman Kelly Nantel told MarketWatch.
For now, Big Tech is taking a hit in market valuation. The aggregate market capitalization of about 300 publicly traded technology companies with operations in San Francisco and the Valley is at its lowest level, $9.98 trillion, since 2013 after peaking at nearly $15 trillion in November 2021, says Rachel Massaro, vice president of research at the Silicon Valley Institute for Area Studies.
“There’s definitely a confluence of things that make everyday life difficult,” Massaro told MarketWatch. “It’s a huge impact that trickles down to businesses, management and the level of hiring.” [The unemployment rate in Santa Clara and San Mateo counties, in the heart of the valley, is at a 22-year low of 2.05%, though that could change if layoffs pick up and hiring clamps down.]
Like almost everyone else, cybersecurity startup Aura is watching costs closely and preparing for a tough macro climate “for years” between inflation, war, supply chain issues and a post-COVID climate, the report said. Aura CEO Hari Ravichandran at MarketWatch. “It impacts the whole business ecosystem,” he said.
Adding to economic uncertainty: Demand for PCs and tablets is heading for its worst decline in several years, according to a new forecast from International Data Corp. Global traditional PC shipments will drop 8% year-over-year to 321.2 million in 2022 – the biggest drop since 10% in 2015. were lowered to 158 million, down 6% from 2021 – its worst percentage drop since 10% in 2018.
“We are very confident that the commercial PC market will remain stronger than the consumer and education markets,” IDC analyst Ryan Reith told MarketWatch. “But that won’t match the growth spurt during the pandemic in 2020 and 2021. The challenge remains inflation, war in Ukraine, a lockdown in China and some lingering supply chain issues.”
Another dynamic is the jigsaw-shaped impact of COVID on job security at companies that benefited greatly from the hyper-growth days of the pandemic, when homebound Americans splurged on streaming, gaming and social media.
After spending the better part of two years growing its content and users while garnering millions of new subscribers, Netflix Inc. NFLX,
has imposed layoffs in recent weeks. Last month, it announced internally that it was laying off about 150 employees, including some in the management ranks and in the animation division, who make up about 1.3% of the company’s 11,300 employees.
Read more: Netflix lays off 150 employees as executives seek to cut costs
The shaken circumstances at Netflix and elsewhere represent a shocking turn of events for employees jumping from one high-paying gig to another — sometimes, within months, employment experts say.
“It was definitely a candidate market the last two years,” Marty Reaume, chief human resources officer at Sequoia Consulting Group, told MarketWatch. She said 459 business leaders representing mostly California-based tech companies revealed in March 2022 that more than 20% of their workforce left their jobs in 2021. The national average, by comparison, is d around 15%.
“The curve couldn’t go up forever” of “frenzied hiring” and “wage increases,” Reaume said. “It was getting a little silly looking for talent. If there’s an upside to this crazy market, things will calm down a bit.