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    Tech Giants Brace for Economic Downturn

    Amazon is the latest to join the line of tech giants who have announced a hiring freeze for the foreseeable future. On November 2nd, Beth Galetti, senior vice president of people experience and technology, sent a company-wide note about hiring. The decision comes in response to the pressure the online retail giant faces due to inflation and an impending global recession in 2023.

    In the note, Galetti expressed concerns about "an unusual macro-economic environment" and that the company wants to be thoughtful about its hiring and investment decisions. It wasn't all gloom & doom; there was a glimmer of optimism about the future. Galetti says that Amazon will continue to hire employees in critical areas in 2023 and remains excited about future projects. Recently, Amazon made headlines when they expanded their catalogue of music and podcasts for their music streaming app, available with an Amazon Prime subscription.


    Meta, Google & Bad Time for Marketing

    Meta has been cutting costs for over a year, aiming for a 10% reduction. Earlier this year, Meta's CEO Mark Zuckerberg said that the company plans to "steadily reduce headcount growth over the coming year" (July). Though there was no mention of layoffs at the time, employees were given time to apply for other positions internally in case their projects were scrapped. Meta continues investing heavily in AR and VR technology to build its Metaverse but doesn't expect profits soon. As of this writing, layoffs are inevitable, impacting 10% of Meta’s workforce.

    Almost coincidentally, Alphabet's CEO Sundar Pichai told Google employees in July that the company was looking to curb its hiring for the rest of the year. He urged employees to be more entrepreneurial. Like Meta, Google employees were also given time (60 days) to apply for other positions internally. It is reported that 95% of the employees who wished to stay with Google found different roles within the given time.

    According to Neil Patel, companies that earn revenue from online marketing and running ads will struggle in 2023. Meta's revenue per user is down more than 50 cents. Google saw a slight increase, while YouTube was down by 2%. Snapchat has a similar story and has announced layoffs for 20% of its employees.


    No One is Buying PCs!

    In the second week of October, Intel announced layoffs for 20% of their employees, taking effect at the end of the last month. This announcement came in response to a decline in sales in the year's second half due to inflation, rising interest rates and geopolitical tensions. According to reports, revenue is down by 25% in the second quarter, and PC sales took a 15% dive in the third quarter.

    In the third week of October, Microsoft followed in Intel's footsteps and decided to implement layoffs. The number of employees is unknown, but more than 1000 people will be impacted across divisions. The company will continue to hire in crucial growth areas per evolving business priorities.

    Earlier in the week, the US-based ridesharing company Lyft decided to fire 13% of its employees. The laid-off employees will receive 10 weeks of pay and insurance coverage until April 30th, 2023, as part of their severance package. Further, employees who have been with the company for over four years will receive an extra four weeks' salary. The company has continued to reduce costs after its shares fell by 60%, followed by a hiring freeze and pausing less critical initiatives.

    These actions indicate that the tech giants are bracing for the looming recession and economic downturn in 2023. Everyone is feeling the impact of inflation and economic uncertainty. These companies hope to survive this period with minimal damage by making structural adjustments and reducing expenses by any means necessary.

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    About the Author

    Kamal Rastogi is a serial IT entrepreneur with 25 yrs plus experience. Currently his focus area is Data Science business, ERP Consulting, IT Staffing and Experttal.com (Fastest growing US based platform to hire verified / Risk Compliant Expert IT resources from talent rich countries like India, Romania, Philippines etc...directly). His firms service clients like KPMG, Deloitte, EnY, Samsung, Wipro, NCR Corporation etc in India and USA.

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