Thousands of job cuts at major technology companies announced in recent months are just a small fraction of the number of people hired by those same companies since the start of the Covid-19 pandemic, according to fDi’s analysis of company filings and layoff data.
Since 2019, the 10 companies that have announced the largest headcount reductions – such as Amazon, Microsoft, Google and Meta – have collectively increased their workforces by about 875,000 employees. This is almost 10 times as many new roles as the combined total of roughly 90,000 job cuts made by these same firms, according to Layoffs.fyi, a website that has tracked tech layoffs since March 2020.
Tech companies went on a hiring spree during the Covid-19 pandemic due to low interest rates and demand for tech products and services from consumers stuck at home. This over-hiring is now being partially unwound through layoffs amid tougher economic conditions, but the total number of employees at most firms remains significantly higher than in the pre-pandemic years.
Amazon, which announced it would eliminate just over 18,000 roles in January 2023, has accounted for the vast majority of job creation among these top tech companies. Since 2019, the ecommerce giant has added 743,000 global roles, bringing its total workforce to 1.54 million full-time and part-time employees.
Amazon CEO Andy Jassy wrote in a blog post that the job cuts will help the company pursue “long-term opportunities with a stronger cost structure”.
He added: “Companies that last a long time go through different phases. They’re not in heavy people-expansion mode every year.”
Meta, parent company of Facebook, Instagram and WhatsApp, said in November 2022 that it plans to let go 11,000 employees, equivalent to about 13% of its global workforce. This is about a quarter of the 41,540 additional people Meta employed at the end of 2022 relative to 2019. By comparison, Google parent Alphabet’s 12,000 announced job cuts are equivalent to 16.8% of the new roles created at the company since 2019, while Salesforce’s 10000 layoffs account for 26% of its pandemic job creation.
When layoffs first started to increase in number in March 2022, they were mostly concentrated in smaller start-ups in sectors most affected by rising interest rates, such as finance, real estate, food and transportation, according to Layoffs.fyi data. These job cuts have coincided with a sharp fall in venture capital funding as start-up investors have become more cautious in a higher-interest-rate environment.
Since November 2022, larger big tech companies have announced layoffs due to the impact of the economic climate on their share prices, customer demand and earnings. Nearly half of the 147,000 tech workers laid off between October 2022 and January 2023 came from Amazon, Google, Meta, Microsoft and Salesforce alone.
Roger Lee, founder of Layoffs.fyi, says that despite the growing number of tech layoffs there is “still reason for hope”, due in part to there still being plenty of tech jobs available. Currently there are more than 65,000 active tech job postings, according to Comprehensive.io, another website launched by Mr Lee’s team which tracks wages at about 1000 tech companies and start-ups. Average salaries for software engineers stand at between $130,000 and $198,000 per year.
Mr Lee believes that tech layoff numbers will start to subside if and when interest rates stabilise or even decline. In February 2023, the US Federal Reserve raised its federal funds rate to a target range of between 4.5% and 4.75%, which was 4.5 percentage points higher than a year earlier. The increased cost of capital has also weighed on global cross-border mergers and acquisitions.
“Despite all the ‘doom and gloom’ layoff news, I’m as optimistic as ever about the future of the tech industry,” says Mr Lee. “Tech rebounded stronger than ever after the dotcom crash and the Great Recession. I believe the same will happen again this time.”