Tech Layoffs And Hiring Freezes Appear To Accelerate

While much of the talk in the tech sector earlier in the year focused on falling valuations, falling stock prices and slower financing rounds, over the past two months there has been a lot of talk about something that is much closer to home for many people.

Many tech companies are slowing or freezing hiring, while others are going the extra mile and laying off workers — and the pace seems to be accelerating.

It’s only been since April that companies ranging from the personalized video platform Cameo to Facebook mother Meta have been adjusting their employment plans. According to Business Insider, Cameo is reportedly going to cut 80 employees — 25 percent of its workforce — per The Information, while Meta is freezing the hiring until the end of the year.

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While the exact number of layoffs in the tech sector in recent months has been difficult to quantify, Crunchbase data shows that more layoffs are being written this month than since the 2020 pandemic. In the week of May 2, Crunchbase recorded 43 layoffs – news sources and articles that mentioned layoffs – the highest figure since September 2020.

However, that number is a long way from the highs in the first few months of the COVID-19 pandemic in the fall and winter of 2020, when companies tried to save money and signals of layoffs mainly fluctuated between 70 and 80 each week, according to the report. the report. Crunchbase data.

the labor market

All this does not mean that the labor market is collapsing. In fact, recent numbers illustrate that it is still going strong. Last week, the US Department of Labor reported that the economy added 428,000 new jobs, surpassing the Dow Jones estimate of about 400,000.

However, tech companies have faced severe market pressures in the public markets — with the Nasdaq Composite down more than 25 percent this year — as startups faced declining valuations and the slowing flow of venture capital dollars.

A quick rundown of some of the notable layoffs and employee freezes in recent weeks include:

  • On April 18, mortgage tech company Blend Labs said it would lay off 10 percent of its workforce — or about 200 positions — in a filing with the Securities and Exchange Commission.
  • Later in April, financial trading platform Robinhood — which went public last year — announced it would be shedding about 9 percent of its workforce.
  • Also in late April, Netflix fired dozens of employees from its editorial companion site Tudum — just months after he was hired to build the site. The announcement came after a quarterly earnings call in which the streaming services said it was losing 200,000 subscribers and its stock plummeting.
  • Brian Olsavsky, chief financial officer of Amazon, announced at the company’s April 28 earnings conference that the retail giant has too many employees after hiring more employees as it braced for workers who would be sick as a result of the rise. of the Omnicron COVID-19 variant.
  • Earlier this month, several reports said Amazon aggregator Thrasio would have an unspecified number of layoffs and replace its CEO. The $10 billion company announced the first close of a $1 billion Series D in October.
  • That was followed by San Jose, California-based financial platform MainStreet — valued at $500 million last year — which cut about 30 percent of its workforce, according to a report. tweet from CEO Doug Ludlow.
  • On May 5, San Francisco-based On Deck, which helps founders navigate the startup world, said it would lay off 25 percent of its workforce or 72 employees.
  • The following day, it was reported that several employees at San Francisco-based collaboration tool startup Mural had been laid off, according to their LinkedIn pages.
  • Late last week, The Information reported that Miami-based Reef Technology, a haunted kitchen operator that has raised more than $1.5 billion in capital, would already lay off 750 employees this week.
  • Earlier this week, Uber said it will adopt more selective hiring practices in the future, and the hiring slowdown is in response to a “seismic shift” in the market.
  • That was followed on Tuesday by news that online car dealership Carvana had laid off 2,500 employees — many of them reportedly via Zoom.
  • Just on Wednesday, AI startup DataRobot — whose investors include New Enterprise Associates and Tiger Global Management — announced it would lay off 7 percent of its 1,000 employees, according to a report in The Information.

Fluctuating Market

The announcements come as 40-year high inflation, rising interest rates and geopolitical tensions are making investors nervous.

Investors in both the public and private markets appear to be planning to change some of the metrics they’ve used to value technology companies, such as high growth, and focus on strong cash flow and profitability.

To align, both private and public companies in the sector appear to be watching their money burn to appease investors and save money in a tightening market where capital is becoming more expensive.

Unfortunately for workers, this comes after many tech companies have significantly expanded their workforces as the pandemic helped many experience unprecedented growth, especially in industries such as online retail and work-at-home technology.

Not all is doom and gloom in space. The long-term job prospects in the tech sector are still bright as it has never been more intertwined with both personal and work life. According to the US Bureau of Labor Statistics, the number of technical jobs, including web developers and software engineers, is expected to continue to grow over the next decade.

However, the coming quarters – perhaps more – could be bumpy for those in the industry.

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Illustration: Dom Guzman

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