This past week was brutal for Big Tech employees.
Over the last three days, three of tech’s biggest companies commenced or announced layoffs that impacted over 40,000 workers.
On Wednesday, Microsoft announced plans to lay off 10,000 employees by March as Amazon started emailing layoff notices to more than 18,000 workers. Then, on Friday, Google CEO Sundar Pichai announced the search giant will cut 12,000 employees.
“It’s a bloodbath,” one Microsoft employee said.
Tech companies embarked on a massive hiring spree as the Covid-era made their products the backbone of the world’s remote-working offices. But that record-hiring made a dent on these companies’ bottom lines. As economic conditions sour, Big Tech companies are unwinding some of that headcount.
These companies were in a “very different economic reality,” Evercore analyst Mark Mahaney wrote in a note.
As employees reel from the anxiety of layoffs that have reached a new peak, many predict an industry that will be irrevocably changed: On the other end is emerging an industry less focused on hyper growth, with more stable share prices, trimmer headcounts, and for employees, much leaner compensation.
Microsoft and Amazon did not comment while Google did not respond to a request for comment.
Last fall, as companies like Amazon and Meta started cutting jobs, Google seemed like it would hold out. The company prides itself on being employee friendly and had never previously done mass layoffs.
But Googlers still wondered if they would be next. Internally, rumors circulated about job cuts and employees would post memes on an internal Memegen site about how they were anxious about possible downsizing that could come.
When employees asked CEO Sundar Pichai about the possibility of workforce reductions last year, the chief executive was mum. “[It’s] tough to predict the future,” he told employees in December.
Recently, employees said those fears were compounded as Alphabet’s healthcare subsidiary, Verily, trimmed 200 workers on January 11, alongside Microsoft and Amazon announcements of staff cuts.
“Seeing the layoffs from Microsoft and Amazon, it was inevitable that it was going to come our way,” said a former Google recruiter who was terminated on Friday.
That employee first learned of the job cuts from news reports before discovering they had been dismissed after checking their personal email account. Later in the day, they found out their manager was also let go.
Another Googler, who worked as a recruiter, said they awoke to a flurry of text messages from friends asking if he was OK before finding out his work email was deactivated.
“We were in the dark,” the recruiter said.
While last fall’s layoffs occurred at companies like Amazon, Meta, Snap, and Twitter which rely on online advertising for revenue, cuts at Google are a sign the online ad business is getting worse.
Pichai told employees these recent workforce reductions reflected the company’s priorities for the next year.
“We’ve undertaken a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company. The roles we’re eliminating reflect the outcome of that review,” Pichai wrote in a note.
While Google Cloud had some layoffs in areas like sales operations and recruiting, roughly half of Google’s current job openings are in Cloud, possibly a sign that the company will continue to invest in its Cloud business as advertising slows.
Google may also prioritize staff useful in maintaining its dominance in AI battling the threat of Microsoft-backed OpenAI, which produced ChatGPT. According to the New York Times, the company is preparing to launch over 20 new AI products and embedding chatbot features into its search engine.
ChatGPT is not an “existential risk” for Google, but it’s showing a “sign of urgency,” Mahaney wrote in a note to clients.
Early Wednesday, Microsoft CEO Satya Nadella emailed employees informing them that the company intends to cut 10,000 jobs by March. Some employees noted that rumors of layoffs had been circulating for a while as managers missed important meetings the day before.
That morning, one affected employee said they then met with a VP informing them that they would be let go and later received details of their severance package.
Several employees said their managers were in the dark about the plans, including one person who said they were the first to tell their manager they had been laid off.
While the company expects to reduce its workforce into the spring, the divisions immediately impacted included the team responsible for Bing search engine and Edge Browser, known internally as WebXT. Others impacted included members of Microsoft’s hardware division including Surface Hub, alongside gaming, sales, recruiting, human resources, and consulting roles.
The company cut at least 1,000 people on the day it announced the layoffs.
The timeline has put many employees on edge, waiting to find out who will be next.
“Morale is definitely low across teams,” another Microsoft employee said. “All of the shuffling makes it difficult to be productive.”
To help managers cope with employee sentiment the company sent an email with phrases and tips they could use to communicate with employees about downsizing. The email guided managers to “show empathy and compassion” while telling employees “we must continually ensure we are aligning the right resources to the right opportunities.”
One executive who was informed of the company’s layoff plans said managers were asked to identify employees who could be let go over the coming months and others who should be put on performance improvement plans. Microsoft previously told Insider this is not a companywide guidance.
While the company’s operating system, Windows, experienced growth headwinds as the remote work boom ended, its cloud division, Azure, is still growing albeit below expectations. The company also still has plenty of cash to potentially make an acquisition to add to its spread of enterprise tech offerings like Azure Cloud, Office 365, LinkedIn, and GitHub. Microsoft is also reportedly investing $10 billion in OpenAI, the organization that develops ChatGPT.
“Investors can expect to hear more about Microsoft’s big vision,” Dan Morgan, senior manager at Synovus bank, wrote in a note.
On January 4th, Amazon Chief Executive Andy Jassy, announced the company will cut 18,000 jobs, mostly in human resources and their retail businesses.
That was after members of the press reported roughly 10,000 job cuts across retail and the Alexa voice-assistant divisions last fall.
The layoffs began Wednesday.
Amazon HR boss Beth Galetti in an email to staff that Wednesday reiterated that most of this year’s restructuring will affect the retail division — Amazon stores — and HR — the people-experience and technology departments.
On Wednesday, Amazon employees learned they were laid off by email.
“Unfortunately, your role has been eliminated,” Galetti wrote in one of the emails viewed by Insider. “You are no longer required to perform any work on Amazon’s behalf effective immediately.”
Many Amazon employees were upset about the ambiguity and lack of communication in the overall downsizing process. As the layoffs began, employees scrambled to an internal Slack channel to put together a list of teams affected while some expressed the need for a union for corporate workers, as Insider previously reported.
Amazon’s cloud unit was largely spared, according to several Amazon Web Services employees who spoke to Insider.
Over the last decade Big Tech companies spent money “like 1980’s rock stars,” wrote Dan Ives, managing director at the investment firm Wedbush .
Now, it’s cutting costs to weather out a potential economic recession.
On the other end, tech companies may look much different this decade as they did in the last. As companies like Google, Amazon, and Microsoft cut costs, they’ll find ways to operate leaner, and their stock prices will stabilize. This could restart the “next growth cycle” in the coming years, Ives wrote.
These workforce reductions could also reset compensation. Stock has long been a major part of Big Tech compensation, yet giants have been seeing the value of their stock decline. This will cause a domino effect across the industry as well, as startups will be able to hire employees, including those recently laid off, at lower compensation packages and as stock options drop in value.
As Ives noted, Silicon Valley’s “hyper growth” era might be over — at least for now.
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2023 Layoffs Continue With Google, Amazon, Microsoft Slashing … – Business Insider
This past week was brutal for Big Tech employees.