Tech job prospects worsened on Thursday, with ride-hailing company Lyft Ltd.
and payments company Stripe Inc. have announced massive job cuts and Amazon.com. Ltd.
It has said it will freeze hiring for several months.
With the Federal Reserve (Fed) raising interest rates again to combat inflation and the risk of the US economy slipping into recession heightens, there has been a spate of grim news for the industry. Faced with that possibility, tech executives warn that tougher times are ahead.
“We are facing an extraordinary macroeconomic environment and want to balance hiring and investing with thinking about this economy,” said Amazon senior vice president of employee experience and technology. Beth Galletti said in a memo to employees this week. The memo informed that Amazon plans to suspend hiring across its corporate workforce, including those on high-profile teams such as Prime Video and grocery stores.
After years of unprecedented growth and record profits, many of the world’s largest tech companies have been plagued by changes in post-pandemic shopping patterns, forcing companies to consider spending on everything from advertising to investments. In some cases, efforts are being made to adjust salaries at companies that have already cut staff.
U.S. unemployment claims declined from the summer peak through the fall, and were stable at low levels last week. The Labor Department’s October jobs report was released on Friday and provides the latest snapshot of the overall job market.
Companies are citing the broader economic climate, but hiring freezes, layoffs, and cost cuts (some industries haven’t been hit too hard) are likely to erupt as the pandemic brings prosperity to the sector. It highlights how the tech sector may have gone too far.
“When all is well, negative productivity can be hidden,” said Mark Stockl, CEO of investment firm Adams Funds. “If your earnings are rising, it’s easy to protect your margins, but if your earnings stop or growth slows, you need to see where you’re spending your money.”
For a technology company that has only grown for years, layoffs would be a cultural abomination and difficult to implement, Stoeckle said.
Amazon’s hiring suspension adds to a string of similar news released by other tech companies.
Lyft co-founders John Zimmer and Logan Green said Thursday that the company will cut 13% of its workforce, or nearly 700 jobs. In a memo, the founders stressed the possibility of a recession and said they expected ride-sharing insurance costs to rise. Lyft has more than 4,000 of his employees, excluding drivers. The company laid off about 60 people in July, and had earlier indicated plans to slow hiring and cut budgets in some departments.
Stripe also outlined layoffs for 14% of its workforce on Thursday. In a memo to employees, CEO Patrick Collison cited “stubborn inflation, energy shocks, rising interest rates, cut investment budgets and sparse start-up capital.”
Also on Thursday, Dapper Labs, which creates non-fungible tokens from National Basketball Association and National Football League content, announced it would lay off 22% of its staff. Cryptocurrency exchange Coinbase Global Ltd.
Trading firm Robinhood Markets laid off 18% of its workforce this summer Ltd.
Technology companies face myriad challenges. Facebook parent company Meta Platforms Inc. plans to cut costs by at least 10% through job cuts and more.Alphabet of the corporation
Google requires some employees to apply for new jobs to stay with the company, Apple Ltd.
Management says they are hiring in a “deliberate” way.
Meanwhile, at Twitter, Elon Musk’s ownership has brought a wave of change, including executive resignations and plans for large-scale layoffs. Company employees and people familiar with the matter estimate that up to 50% of the 7,500 employees could be cut. The proposed layoffs are expected to not only cut engineer positions, but also affect other areas of the company.
The downtrend is happening this year despite big companies trying earlier measures to cut costs. For Amazon, the company has scaled back plans to open warehouses this year and froze hiring in core retail last month. Lyft is also downsizing again after previous adjustments.
Amazon’s suspension of hiring doesn’t seem to affect hourly workers in thousands of warehouses across the country. In that department, Amazon has been actively hiring in recent months in preparation for the busy holiday season.
Amazon has warned it is taking a cautious approach in the current economic climate. Amazon’s chief financial officer Brian Olsavsky said last week that the company was bracing for slowing growth and was “very careful about hiring.” He said company management is seeing signs that consumers are tightening budgets and inflation is still high.
The company’s shares have fallen since its quarterly earnings report a week ago suggested that fourth-quarter sales could be far below expectations. The company says he expects operating profit of $0 to $4 billion, Amazon’s most important selling period of the year.
Top Amazon leaders warn of worsening economic conditions. CEO Andy Jassy said last week that the company needs to balance its investments. The message follows a recent tweet by Amazon founder Jeff Bezos.
At a press conference last week, Mr. Orsavsky seemed to agree with that message. “Jeff is a great guy, so when he speaks, I think most people listen and pay attention,” Olsavsky said.
Emily Glazer contributed to this article.
Please contact Sebastian Herrera (firstname.lastname@example.org) and Preetika Rana (email@example.com).
Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdb8