In the San Francisco Bay Area, they were more likely to hint that a mistake had been made. Mark Benioff of Salesforce Inc. further clarified: Then Meta Platforms Inc.’s Mark Zuckerberg chose to treat his November layoffs message to employees as something of a confession.
At the onset of Covid, the world rapidly moved online and the surge in e-commerce led to a significant increase in revenue. Many predicted that this would be a permanent acceleration that would continue long after the pandemic was over. So did I, so I decided to significantly increase my investment. Unfortunately this didn’t work as I expected.
Of course, Mr. Zuckerberg may regret many other things, starting with his decision to rename Facebook in 2021 and bet his future on virtual reality headsets. Well, Meta really hired a lot of people in 2020 and 2021, and they grew their headcount by 60% during that period. Microsoft, Alphabet, Salesforce and Meta combined saw a 35% increase in jobs, or 126,170 jobs for him.
These four companies have announced a total of 41,000 layoffs so far, about a third of the jobs added since 2019. The company calls it “field and customer support,” which is why I left it off the charts. Adding 810,000 employees from 2019 to 2021, he more than doubled the number of employees, employing more people than any U.S. company other than Walmart.
Amazon has announced 18,000 layoffs so far this fall and winter. This is the highest among technology companies and only 2.2% of headcount growth in 2019-2021. The company said that in the second quarter of 2022 he cut 99,000 employees, mainly due to a reduction in warehouse and logistics employees, while in the third quarter he cut 21,000. has been added. (Amazon includes employee numbers in its quarterly earnings calls, but most companies only report employee numbers once a year in their 10-K annual reports.)
The current total number of tech layoffs for 2022-2023, compiled by Layoffs.fyi, which includes companies in retail, finance, healthcare and cryptocurrencies, is 219,132, of which 59,448 have been announced this year. Meanwhile, U.S. employers overall added 4.5 million jobs in 2022, according to the U.S. Bureau of Labor Statistics, but there were no signs of a slowdown in December employment figures.
We don’t have full December numbers yet for the industry categories that cover most or all of what Microsoft, Alphabet, Salesforce, and Meta do, but those three sectors show us that over the first 11 months of the year added 117,000 employees, more than added in 2020. or 2021.
This hiring boom has been around for a while, but has accelerated over the past three years, and is highlighted by the previous trend line for comparison.
Even before Covid-19 arrived, there were signs of acceleration. This reveals why the tech company’s CEO thought what he saw during the pandemic was the new normal. As of November, these sectors employ about 171,000 more people in the US than they would have if they stuck with the employment trends of the past decade. Today, technology company executives are looking at headcount numbers that they wouldn’t have been without that busy period when Zuckerberg thought they were in the midst of what he called a “permanent acceleration.” It looks like you’re trying to get it back.
Permanent acceleration isn’t really an issue in business. As a company gets bigger, its growth rate slows down. Indeed, a slump can be followed by a resurgence. A belief in perpetual acceleration is like the point of startup investing, it works until it stops working. But for the big, established companies (Meta will be 20 next year and Microsoft will soon be 48), it can lead to a difficult situation like the one currently unfolding.
Note that Apple Inc. is not mentioned here. It hasn’t announced any job cuts, hasn’t accelerated hiring during the pandemic, and its headcount is growing at an annual rate of 6% from 2019 to 2022 (Apple’s fiscal year ended September 2019). We have already reported the end of the fiscal year because of this). After recording an annual growth rate of 8% over the last five years. The same goes for the technology sector, which employs more people than his three above, computer systems design and related services.
This is the area of companies such as Accenture Plc, the third-largest employer in the S&P 500 index, primarily seeking to help companies and other institutions outside the tech industry keep up with technological developments. (“Becoming the next best company”). Accenture’s way of saying it). Employment numbers in the sector fell early in the pandemic, but from late 2020 he recovered rapidly through 2021, with employment returning to a path slightly below its pre-pandemic trajectory in 2022. . So far there is no indication that this is about to change.
The recently announced layoffs of technicians are of course painful for the 200,000+ workers who are suddenly inundated with other layoff victims with similar skills and experience who must be notified and enter the job market. As my fellow Bloomberg Opinion columnist Sarah Greene Carmichael writes, layoffs can undermine employee morale and customer relationships and backfire on the companies laying off. .
But they’re also apparently a reaction to a hiring boom that’s gotten a little out of hand. Other U.S. employers have struggled to hire enough people in the past few years (the number of job openings in November was reported to have increased by 3.3 million, or 51%, from his three years earlier). ), the situation facing tech companies is unique. According to Salesforce’s Benioff, “the recession we’re facing right now” isn’t a common phenomenon. At least not yet. The risk is that it could become one as tech companies suddenly shift from hiring to laying off.
Bloomberg Opinion Details:
• Stop Schadenfreude over bloated tech layoffs: Lionel Laurent
• Are tech giants safe from activist shareholders?: Olson and Hughes
• Layoffs often make companies worse: Sarah Green Carmichael
This column does not necessarily reflect the opinions of the editorial board or Bloomberg LP and its owners.
Justin Fox is a Bloomberg Opinion columnist covering business. He is the former editorial director of Harvard Business Review and has written for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market”.
More articles like this can be found at bloomberg.com/opinion.
