Tech companies around the world have laid off 35,000 workers as of June, and others are reversing their hiring plans and announcing hiring freezes, according to various news reports. Other reports suggest a hiring slowdown is isolated.
“Layoffs appear to be specific to businesses that are in more fragile financial situations, like if they are unprofitable and funding dried up or if they just don’t have the runway to continue to operate without additional funding,” Daniel Zhao, a senior economist at company-review website Glassdoor, told CNBC News in June.
Facebook is instructing its engineering managers to identify and weed out their lowest-performing employees as the company seeks to rein in costs during an economic downturn in the long-booming tech industry. The message in a leaked memo sent July 8 comes as the company seeks to rein in costs during an economic downturn in the long-booming tech industry.
SHRM Online collected the following news stories on this topic for a closer look:
In Leaked Memo, Facebook Tells Managers Low Performers Don’t Delong
Facebook’s head of engineering, Maher Saba, sent a memo on Friday to managers urging them to identify anyone on their team who “needs support” and report them in an internal human resources system by 5 p.m. Pacific time on July 11.
This month, Zuckerberg told staffers during a companywide call that not everyone was meeting the company’s standards and that some might want to leave voluntarily as the it faces an impending economic downturn, according to media reports. Zuckerberg told staffers they would reduce their plans to hire engineers by at least 30 percent this year, according to Reuters.
The Balance of Power Is Shifting in Tech Industry
For much of the past decade, tech companies have showered their corporate employees with money and lavish perks to attract and retain talent in a hypercompetitive industry. That dynamic kicked into overdrive the past couple of years amid a pandemic-fueled boom for tech products and services.
But the situation has started to cool as the tech industry and the broader economy have been hit by the perfect storm of inflation, rising interest rates, fears of a recession and Russia’s war in Ukraine. A wave of tech companies that had been aggressively hiring have announced layoffs in recent weeks. Many others are also moving to cut costs.(CNN)
Tech Companies Rocked by Layoffs as Industry Faces Biggest Downturn in Two Decades
Many technology companies that expanded during the pandemic are now pulling back, laying off workers and retracting job offers as the U.S. economy slows.
So far this year, tech companies worldwide have laid off a total of 35,000 workers, CBS News reported, citing Layoffs.fyi, which tracks job cuts in the industry. Many more are abruptly reversing their hiring plans; in particular, formerly fast-growing cryptocurrency companies.
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Overall Tech Hiring Slowdown Not Happening, Recruiters Say
Microsoft, Facebook parent Meta, Nvidia and Snap have all announced plans in recent weeks to hire less vigorously, as inflation, the war in Ukraine and the continuing effects of COVID-19 around the world have dampened the outlook for the rest of the year. Venture capitalists are warning their portfolio companies to prepare for darker times, and some startups are laying people off or closing shop.
But experts said so far, the cutbacks are isolated.
Is the Tech War for Talent Over?
The tech sector’s tumultuous year has been denoted by daily announcements of layoffs, hiring freezes and rescinded job offers. The numbers are stark, according to tech layoff tracking site Layoffs.fyi.
About 17,000 workers from more than 70 tech startups globally were laid off in May, a 350 percent jump from April. This is the most significant number of lost jobs in the sector since May 2020, at the height of the pandemic. Much of the tumult has occurred in venture-capital-backed firms as investors abandon risky bets and seek immediate returns.
With Unstable Economy, Hiring Freezes and Layoffs Could Be Looming
HR teams are encouraged to create downsizing strategies—just in case.
Melanie French, managing principal at DLP Capital in St. Augustine, Fla., said she likes to remind senior leaders that while tough personnel decisions and hard organizational changes are never easy, avoiding them does not make them go away or solve the problems.
“Making the decision proactively and not waiting until revenues and sales are at low points actually can be healing and rejuvenating for front-line team members,” French said. “During tough economies, waiting can be a death sentence for an organization that they might never overcome.”
A Weaker Economy Won’t Solve the Tech Talent Crunch Overnight
There has been an increase in the number of startup layoff announcements at companies like Cameo, On Deck and Robinhood over the last month, Tech Crunch reported in May.
Meanwhile, big companies like Netflix, Meta and Uber have announced hiring freezes, with the consumer streaming service throwing some layoffs into the mix as well.
Despite this onslaught of bad news, most startup founders, investors and HR professionals don’t see the job market magically improving for hiring departments, at least in the near term. That means the folks in charge of hiring are still going to have to shake the bushes for talent.