The Real Reasons For Big Tech Layoffs At Google, Microsoft, Meta, and Amazon

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    Some of the world’s largest tech companies have laid off a total of more than 150,000 employees in recent months. The companies involved have given a variety of reasons as to why this is needed, most of them due to the need to cut costs as economic growth slows around the world.

    Not really because the companies involved need the money. Microsoft dismissed Almost simultaneously, nearly 10,000 employees announced plans to invest $10 billion in OpenAI, creators of the viral application ChatGPT. Business reasons appear to be at the heart of her decision to invest the equivalent of $1 million per employee laid off in her AI company.

    Similarly, Google’s parent company Alphabet announced plans Cut 12,000 jobs worldwide. This is a reduction of about 6%. CEO Sundar Pichai has previously described AI as the most transformative technology of all time, and said the strategy will be to “direct our talent and capital to our top priorities” when making layoffs. increase. Google is working on its own AI-powered answer to ChatGPT and is widely believed to be out soon.

    The four largest tech companies, Meta, Alphabet, Amazon and Microsoft, have combined to cut 50,000 jobs. Meanwhile, Twitter’s incoming president Elon Musk is said to have laid off half of the company’s employees when he took office late last year.

    So what is the real reason for these massive cuts that have put tens of thousands of people out of work (80% of them in the US)? 365 Data Science They sought to find out the truth when they decided to perform their own analysis of the numbers.

    Some of the findings were perhaps not so surprising. Tech companies backed by record earnings are known to have embarked on mass hiring during the Covid-19 pandemic. Competition for top talent has intensified, the media has been filled with lavish benefits stories, and salaries have reached record levels. So it’s not surprising that recently laid off employees have been in the job for a median of about two years. In some ways, this could suggest that these job cuts represent a rollback of employment policies that have been put in place since the pandemic.

    But even more surprising was the fact that those who were laid off had an average of 11.5 years of experience. So not all of these are young, inexperienced employees who can be quickly replaced or their roles automated. One possible reason for this statistic is that long-serving employees tend to receive higher salaries, and cutting staff can help companies reach their financial goals. is.

    Interestingly, however, the most impacted role and function is HR, accounting for 28% of all layoffs. There are two possible reasons for this for her. First, if companies are laying off employees, they will also be hiring less. Decreased hiring reduces the need for HR staff.

    The second reason, and perhaps equally relevant, is that HR is a field where some functions have been replaced by automation. Platforms already exist aimed at automating the mundane tasks associated with interviewing and onboarding new employees, such as checking references, verifying identities, and conducting health and safety assessments. In recent years, companies such as Amazon have used AI to identify underperforming staff and fire them.

    You can also gain insight into how impacted roles differ across companies. At Microsoft and Meta, HR and talent sourcing were the hardest hit, while at Google and Twitter, software engineers bore the brunt of cuts.

    According to data collected by 365 Data Science, a slightly higher proportion (56%) of staff laid off were women. This is alarming given that the tech industry has spent much of the past decade trying to address the gender imbalance that already exists in this sector, especially in tech and engineering jobs. It sends exactly the right message to potential female hires that they should be content with not only a pay gap and a low chance of promotion to senior positions, but a high chance of being fired. not.

    Finally, another worrying statistic that caught our attention in the report was the fact that only 10% of those who were laid off ever posted a new job on their LinkedIn profile. . Of course, it’s too early to tell if this could translate into long-term unemployment. Many may just be enjoying a break before jumping into the job hunt. Or maybe you just haven’t updated your profile yet. But watching how this statistic develops over the next few months should provide some interesting insight into whether it’s still easy for skilled tech workers to change jobs. It is quite possible that a person will choose to head into the self-employed or freelance gig economy.

    So have the tech giants expanded too much, or just expanded too quickly? Or have innovations in AI and automation created a situation where the fastest way to save money is to replace people with machines? In fact, it could be a little bit of both. No company has identified automation as the driving force behind this move, but given the jobs affected and the line spacing, it is tempting to conclude that automation is a contributing factor.


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