Since May, there have been more and more layoffs in the tech industry. Layoffs.fyi, a site tracking dismissals at tech start-ups, reports nearly 125,000 employees fired since the arrival of Covid-19. This is a sign of the slowdown in activity in the sector linked to the gradual exit from the pandemic.
The tide is turning in the tech sector
It is not good to work in the technological environment these last months. Even some giants in the sector such as Snap, Microsoft, Meta, Twitter and Coinbase have announced that they are slowing down or even freezing their recruitments.
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At the beginning of May, Meta announced that it was revising its rate of hiring downwards in order to better control its expenses. Since the first quarter, the company has faced the weakest growth in its turnover: 27.9 billion dollars generated, an increase of only 7%. A spokesperson for Facebook’s parent company said: we regularly re-evaluate our talent needs, based on our business needs and, in light of the forecast of expenses given for this period of results, we are slowing the growth of recruitments. However, we will continue to grow our membership “.
At Microsoft, it is the branch responsible for the development of Windows, the Office suite and the Teams application which is concerned. The unstable economic context pushes the company to think before each new hiring within the division. The recruited person must be approved by the vice-president. ” Microsoft will continue to recruit in the coming year, but will pay more attention to the allocation of resources within the company. She wants to make sure the right people are properly assigned to the right opportunities “says a spokesperson.
For Coinbase, the economic context is all the more complicated as the world of cryptocurrency was very suddenly shaken after the collapse of the stablecoin TerraUSD. In a blog post, Emilie Choi, president and chief operating officer of the exchange platform, says she is revising her company’s ambitions downwards. ” At the beginning of this year, we planned to triple the size of the company. Given current market conditions, we believe it is prudent to slow down recruitment and reassess our headcount needs against our highest priority business goals. she detailed.
Snap, the parent company of Snapchat, said at the end of May it was slowing down its recruitment process until the end of the year. The social network revealed during its results for the first quarter of 2022, not having reached the sales and profit forecasts hoped for by Wall Street. Snap plans to hire 500 new employees this year, well behind the 2,000 recruits the previous year.
Twitter opted for a hybrid treatment of the situation. Earlier this month, Parag Agrawal, chief executive of the platform, fired two executives working in the product sector for budgetary reasons before temporarily halting its recruitments. According to Bloomberg, the company has also reneged on certain employment promises. A man residing in Mexico City, who was applying for the social network, saw his job offer canceled at the last moment. The takeover by Elon Musk is not for nothing in this situation.
Other tech companies have been more radical and have carried out mass layoffs. In mid-May, Netflix announced the dismissal of 150 of its employees after a catastrophic first quarter of 2022. Between January and March 2022, the streaming giant lost around 200,000 subscribers, the first in over a decade. The reason given for these dismissals is his loss of growth, “ as we explained when we released the results, the slowdown in our revenue growth means that we also have to slow down the growth in our costs as a business. That is why, unfortunately, we are now parting ways with approximately 150 employees, mostly based in the United States. “. Netflix had also thanked 26 entrepreneurs dealing with Tudum, its platform dedicated to original productions.
More recently, PayPal laid off more than 80 employees from its headquarters in San Jose. To this were added new job cuts in three American cities: Chicago, Omaha and Chandler. The latter, provided for in the company’s strategic plan presented in 2020, will allow the group to save 260 million dollars per year.
And start-ups in all this?
The Layoffs.fyi website, quoted by Protocol, offers a participatory tool for monitoring referrals in tech startups. It lists nearly 100 start-ups that have made layoffs since the start of the year, half of which took place during the month of May. FoodTech companies are among those that fired the most people.
Gorillas and Getir, two specialists in the delivery of ultra-fast shopping to homes, set up in France during the pandemic, taking advantage of the economic context. They both did major fundraising, $1 billion for Gorillas, and quickly expanded. To continue to thrive, the two start-ups will have to convince investors that they can be profitable. It is with this in mind that they have parted ways with some of their staff. Gorillas has laid off nearly 300 people worldwide to focus on 5 key markets. Getir, meanwhile, has dispensed with the services of 4,480 people across the 9 markets where it offers its services.
On the FinTech side, the Swedish Klarna will lay off 500 people, or 10% of its workforce. Sebastian Siemiatkowski, Managing Director, insisted that the plans drawn up by Klarna last year were thought out in ” a world very different from that of today “. The online payment company Bolt also had to restructure its teams by eliminating more than 100 positions in order to ” secure your financial position in an unstable market.
The list of companies forced to lay off its employees is far from exhaustive, a symbol of a general exhaustion of the sector. In an email retrieved by TechCrunchY Combinator, a start-up finance company, advises its founders to “ prepare for the worst in view of an economic downturn.
” This slowdown will have a disproportionate impact on international companies, high volume companies, low margin companies, hardtech companies and other companies with a high absorption rate and slow to generate revenue. business », Specifies the email.
Tech companies are preparing for the consequences of a potential post-pandemic bubble.