The pandemic took a significant toll on the economy. Years later, it appears that the economy is still struggling, as companies, particularly in technology, have been forced to fire large numbers of employees.
The beginning point was in December when the CEO of better.com fired more than 900 of his employees via a zoom call. After that, it seems like many tech companies have followed suit.
Some high-profile tech companies have also had to lay off their staff in recent times.
- Meta has said that it will slow down its hiring of engineers by at least 30% this year and plans to lay off proper performance employees from the company.
- Netflix let go of 450 employees between May and June. They stated the reason for this action was that the company was experiencing slower revenue growth.
- Twitter laid off 30% of its acquisition team in June.
- Google, Apple, and Microsoft are reported to have paused or slowed down on hiring and cutting back companies’ spending.
- Shopify laid off 10% of its general staff ( thousands of employees).
- Kuda laid off 5% of its employees this month.
- This year, Tesla has fired over 200 of the company’s employees.
- Spotify said it would reduce hiring by 25%.
The question is, why are companies in this industry (tech) which is perceived as successful and making billions of dollars in revenue, have to cut costs?
First of all, tech startups usually begin with a different business model as opposed to traditional startups, where from day one, the organization looks to make revenue, while tech startups basically want to improve the human experience by creating technological solutions and disruptive systems that can help solve real-life problems, so they seek financial backing from investors.
They want to make an impact and grow before they start making a noticeable profit. And, over time, if there appear to be no positive profit margins, the company is forced to make difficult decisions in order to survive.
Another reason is that the current state of the world economy is unstable due to war, inflation, etc.; this directly or indirectly affects certain companies. According to NASDAQ, from the beginning of this year till now, tech stocks have gone down over 30%.
Finally, some companies, e.g., better.com, have claimed that the inefficiency of employees is the reason why they have been forced to reduce their workforce and work with competent and high-performing workers.
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