Tech Is Freezing Hiring

Sebastien Callebaut -

Meta, Snap, Microsoft, Twitter, DocuSign... Are Freezing Hiring Or Laying Off Employees

In a strategic reorientation that highlights how dramatically technology startups' fortunes have changed in the face of altering market conditions, many had to cut their workforce. Meta now plans to reduce costs by at least 10% by cutting on spending, freezing hiring and even laying-off employees.

  • Meta's head of people, Lori Goler, warned that the company's 2023 budget would be "very tight" across all departments as it works to cut costs. Teams would need to concentrate on essential projects and Meta wouldn't automatically fill open positions
  • Snap now aims to reduce its headcount by 20%. The social media business also announced that it is limiting its investment in a number of areas, giving up projects like its own "Originals" programming and halting the development of a drone project
  • Microsoft also announced a 1% reduction in headcount but explained that its overall workforce would still rise in the coming year
  • GoPuff, a rapid-delivery startup had to cut 10% of its workforce (of 15,000) as the company is concerned about the state of the economy
  • Twitter laid off 30% of its talent acquisition team and paused hiring as it looked to reduce costs
  • DocuSign cut 9% of its workforce to help it achieve profitability objectives

For years, the tech sector has been rapidly expanding its workforce, but the cheap money that supported years of high-flying startups is now running out. Parts of the once-hot IT sector are cooling due to the reversal of some epidemic trends, inflation, supply-chain problems and excess liquidity.

Already More Than 41,000 Lay Offs

According to data gathered by Crunchbase, almost 41,000 workers in the tech sector have been let go so far this year. Layoffs in the real estate sector have also made headlines as mortgage rates have increased and home sales have decreased. In addition, half of US executives surveyed in an August PwC survey indicated they were looking to cut staff even though they were still worried about finding and keeping talent.

  • Despite the alarming surge of layoffs in the tech sector, they might also represent a return to more normal hiring rates while the labor market appears to be resilient overall
  • In August, employers created 315,000 new jobs, which slowed down from July's higher growth rate but was still a respectable gain. And even while the unemployment rate increased to 3.7% last month, it was still at a 50-year low and only marginally higher than 3.5% in July due to more Americans entering the labor force
  • Finally, in recent weeks, the number of new unemployment benefit applications has begun to decline

Disclaimer

Please note that this article does not constitute investment advice in any form. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk and the past performance of a security or financial product does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products.

Credits

Photo by Jared Erondu on Unsplash.