For now, Twitter has frozen most hiring. And there’s more bad news, as Amazon.com Inc. also
said that their warehouses are overstaffed. Uber Technologies Inc. informed its employees to
see hiring as a privilege. After years in which jobs have been added rapidly, some of the fastest
developing and most well-known companies have shown signs that they are planning to be
more cautious when it comes to hiring new people. There’s no way of knowing in which direction
the US job market with these tech giants is heading, especially since the stock market is more
volatile and interest rates are continuing to rise.
What Are CEOs of Tech Giants Saying About Hiring?
According to Julia Pollak, a ZipRecruiter chief economist, the fact that some companies are
hiring slowly has a lot to do with the fact that executives are more averse to risk and no longer
want to tolerate any sort of growth, no matter the costs. Pollak also thinks that the growth during
the pandemic caused many businesses to overextend, and this is one of the main factors that
led to the tech hiring freeze, which will sooner or later pass when the economic situation in the
sector is going to improve.
Workers are more and more worried about the changes in the technology working landscape.
This can be seen on LinkedIn, where everybody talks about how stressed they are because it’s
more and more difficult to get hired. Only a few big tech companies have talked about laying
people off, but many have said they no longer want to spend that much. Meta Platforms Inc., the
company parent of Facebook, said that it’s going to put hiring on hold after more than double
sizing its workforce for the past four years.
Parag Agrawal, Twitter’s CEO, sent a staff memo on Thursday in which he said that his
company will put hiring on hold to review the job offers they have made. According to Mr.
Agrawal, Twitter is going to spend less on travel, marketing, consultants, and some other costs.
Let’s not forget that Twitter was recently bought by Elon Musk, who has agreed to pay $44
billion for it. This is a big change for the company, not to mention that Mr. Musk might want to
make his own changes.
Even giants like Netflix have cut jobs, citing the COVID-19 pandemic’s effects. Some have said
that rapid growth has led to hiring too many people, which is not at all a good thing. Glosser,
Better, and Robinhood are also tech giants that have notably made layoffs this year. It seems
that 2022 has been a pretty bad year for tech workers, but at least startups are coming from
behind, as many people who were left without jobs decided to make it on their own.
Dara Khosrowshahy, the CEO at Uber, informed his staff through a note that his company is
going to consider hiring a privilege from now on, being more deliberate with the way it adds
employees. Mr. Khosrowshahy wants Uber to focus more on making profits, seeing that the
investor and market sentiments are no longer how they were before.
There are also many companies that made great profits during the early stages of the pandemic
and are now in trouble. Carvana Co., the online car dealer, said they would cut either 2,500
workers or 12% of their workforce. Carvana was amongst the youngest companies on the 2021
Fortune 500 List, but this doesn’t mean it won’t lay off workers after the pandemic.
Some Companies Make Spending Plans
At startups and smaller companies, entrepreneurs are saying that they’re trying to be more
prudent with how they are spending money because the times might be changing, and it could
become more difficult to raise big sums rapidly. This is what Vinod Khosla, one of the most
prominent venture capitalists, has said. And when spending is reduced, CEOs might start
thinking twice about hiring new people and expanding their work teams.
Mr. Khosla added by saying that smart entrepreneurs should be more cautious, even if they are
very smart. Capital might be cheap, but this doesn’t mean it should be wasted on gaining an
advantage over rivals or increasing the market size. He also mentioned that, by contrast, now,
capital efficiency can be increased only with less money. This means spending less on making
an impression through advertising or investing in marketing.
And the shifting won’t be only in tech. For example, Jim Hagedorn, the CEO of Scotts Miracle-
Gro Co., has informed his investors during the past week that his company wants to reduce
expenses by as much as 10% before the next fiscal year starts. According to him, the company
might run down on the capital, so they should be more mindful when it comes to redundant roles
or processes. He also mentioned that some structural issues might cause inefficiencies in the
Maria Colacurcio, the chief executive at Syndio Inc., an analytics platform helping employers
find and fix pay discrepancies, says that entrepreneurs are thinking more and more about
conserving their funds. Cash preservation seems to be the main discussion lately, as the
environment doesn’t seem to be one in which money can be raised, said Ms. Colacurcio. She
added that while her company still employs about 150 people, they are still planning to bring in
30 more before 2022 ends.
Ms. Pollak from ZipRecruiter thinks job growth is still strong in the white-collar and
manufacturing hiring sectors because here, employers are not hurrying to lay off any workers. In
fact, they want new candidates and don’t even think about getting rid of their old ones. She
continued by saying that tech giants are drawing more attention to themselves because they are
too anxious about what’s going to happen next with the economic situation. In other words, the
future seems to be what scares them the most.
Crypto Job Market Affected Too
Crypto companies haven’t been spared, either. On Tuesday, Coinbase announced that it is
cutting 18% of its workforce. This means about 1,100 people are being laid off. Coinbase is a
cryptocurrency exchange giant run by Brian Armstrong, who thinks that we’re going to enter a
recession period after a period of 10 years in which the economic situation has boomed. In his
opinion, his $13 billion publicly-traded company had an excessively rapid growth last year due
to the crypto craze.
And the layoffs don’t stop at Coinbase. After growing sixfold back in 2021, BlockFi has
announced that it’s letting 250 people go. While Bitcoin and most of the other cryptocurrencies
are rapidly dropping, crypto startups are starting to fire their people. And the entire tech
downturn is even broader, seeing that the composite index for Nasdaq lost 30% of value since
the beginning of this year. Another big drop in the tech stock index happened back in 2007
when the drop was at 48%.
Challenger says layoffs at tech companies have simply exploded during the past month. In May,
there were announcements that tech jobs would be cut ten times more than they had been
during the year’s first four months. Tech investors don’t necessarily want to see profits when the
economy is in expansion, as they are more interested in growth. However, if borrowing starts
being too expensive or the economic situation is no longer good, then calculus might change.
The tech sector had a very rough May. There have been many layoffs that totaled about 15,000
jobs. And until mid-June, there have been over 21,000 workers in the American tech sector
getting laid off. Some tech companies that had made good profits during the pandemic are now
suffering corrections such as economic distress, rising inflation, shifting consumer interests, and
war. While Twitter and Meta have announced that they will no longer hire, Snap said that it’s
going to slow down the hiring process until revenue targets are achieved. Besides, there’s also
the situation of people leaving on their own, either because they want to change jobs or start a
new career, but the last month’s layoff is still unprecedentedly high.