It is measuring up to be a challenging year for the tech industry, including large companies like Microsoft, which has seen significant downside corrections in company valuations thanks to the Fed’s aggressive stance on interest rates in 2022.
The latest tech firms to feel the economic impacts are software-giant Microsoft Corporation and delivery startup Gopuff. Both companies announced layoffs this week, citing the need to adjust hiring goals over waning confidence and worsening U.S. economic conditions.
Microsoft announced Wednesday it was making cuts to less than 1% of its total 181,000-employee workforce as part of the company’s regular adjustments to the start of its fiscal year, a Microsoft spokesperson said. Another tech company making workforce cutbacks is Gopuff, which said it is trimming 10% or about 1,500 employees in a note to investors last week.
Several other tech companies have also made cuts to employees this year. Netflix reportedly laid off 150 employees in May and made another 300 cuts in June, citing slowing revenue growth and a roughly 70% fall in share price.
Following a steep decline in value, the cryptocurrency market dropped from $1.24 trillion to $929 billion thus far in 2022, which has left many investors apprehensive about the industry’s future. Then there is crypto platform Coinbase, which cut 18% or 1,100 employees. The company predicts the layoffs will incur approximately $40-$45 million in restructuring expenses.
Additional cuts were made by Twitter, which laid off 30% of its talent acquisition team, and Tesla, which cut about 200 auto-pilot employees last month. More recently, engineers at Meta Platforms Inc. told company managers to identify and report low performers so they could force those employees out of the company, according to a post published last week.
Wall Street oracles said in various interviews with so much liquidity getting pumped into financial markets for years. It is no wonder the tech industry was on such a rapid-fire hiring spree. Now that pandemic reflexes have reversed, the tech industry is finally slowing down and adjusting to correct valuations.
The heavy mix of a labor crunch, rising interest rates, ballooning inflation, and supply-chain shortages is signaling that the pressure for layoffs is not likely to reverse anytime soon, the analysts said.