As global economic turbulence deepens, technology companies are looking to weather the storm by reducing headcount.
FREMONT, CA: The global economic downturn affected technology enterprises, which resulted in slower revenue growth and massive layoffs, even though some areas of enterprise IT investment appear to be kept stable.
Through mid-November, there were 1138 waves of layoffs at IT companies worldwide, affecting 182,605 professionals.
Many technology companies responded to worries of an impending recession by slowing recruiting when the global economy started to deteriorate earlier in the year. The bad news is that most of those freezes have since been followed by job cutbacks as businesses seek to minimise operational expenses in light of rising interest rates, the ongoing conflict in Ukraine, high gasoline prices, supply chain problems, and a fall in personal computer sales.
While enterprise IT spending is still anticipated to increase over the course of the following year as businesses use technology to combat the impending recession, the positive effects of enterprise spending on cloud infrastructure and SaaS applications haven't been sufficient to completely improve the situation for the biggest players in the tech sector.
Microsoft's net income increase for the September quarter was at its lowest level in five years due to exchange rates and the decline in PC sales. Despite a significant increase in cloud sales, Alphabet's revenue for the September quarter dropped to 6 per cent..
Spending on cloud infrastructure is also showing some symptoms of being impacted by the overall macroeconomic environment. Although slower than the 33 per cent increase for the previous quarter and the 36.5 per cent growth the quarter before, AWS' September quarter revenue increased by 27.5 per cent year over year.
Business leaders are unlikely to be overly optimistic about the economy in 2023, therefore, it's probable that the number of job losses reported by TrueUp will keep rising.
Here is a list of some of the most notable recent layoffs in the IT sector, which will be updated regularly.
HP (NYSE: HPQ)—Up to 6,000 staff
In addition to reporting financial results for the fourth quarter of 2022 that showed a year-over-year decline in revenue of 11.2 per cent to USD 14.8 billion, HP also disclosed that it anticipates to reduce its 51,000-strong global workforce by about 12 per cent by terminating 4,000 to 6,000 employees by the end of fiscal year 2025.
The layoffs are a part of HP's Future Ready strategy, which was revealed along with the company's quarterly results. Enrique Lores, president and chief executive officer of HP, stated in a conference call with analysts that the strategy will result in savings of at least USD 1.4 billion by the end of the company's fiscal year 2025, allowing it to navigate through what he called "near-term market headwinds" and counteract softness in HP's core markets.
The company's personal systems, consumer, and commercial businesses all had declines in the third quarter of this year of 13 per cent, 25 per cent, and six per cent, respectively. Unit sales of notebooks and desktops fell as well, falling 21 per cent total.
Cisco (NASDAQ: CSCO)—4,100 staff
Cisco revealed it would be laying off 4,100 people, or around five per cent of its 83,000-person workforce, while reporting record quarterly sales of USD 13.6 billion.
The corporation disclosed a reorganisation plan in an 8-K filing for its fiscal first quarter in order to rebalance the organisation and enable future investment in critical priority areas. Restructuring and talent mobility options are part of this rebalancing. The business announced that it will also modify some real estate.
This is a personnel reduction driven by cost savings, Cisco CFO Scott Herren said in a statement to analysts following the release of the findings.
Asana (NASDAQ: ASAN)—97 employees
Asana's chief operating officer (COO), Anne Raimondi, published a message on LinkedIn announcing that the firm was cutting the size of its projected 1,600+ employee global workforce by about nine per cent, or 97 job losses.
The company explained the layoffs in a statement as being a part of a restructuring plan aimed to improve operational efficiencies and operating expenses and better match Asana's staff with current business demands, top strategic priorities, and major growth possibilities.
Asana reported a net loss of USD 62.6 million for the quarter ended July 2022 despite citing a 51 per cent rise in revenue.
Amazon (NASDAQ: AMZN)—10,000 employees
According to a Nov. 14 New York Times article, Amazon plans to lay off nearly 10,000 workers. Even though the reductions would only affect a small portion of Amazon's 1.5 million employees, they would affect both corporate and technology workers, the article claims.
Requests for comment from Amazon were not immediately returned, although its most lucrative sector, Amazon Web Services (AWS), has been exhibiting symptoms of growth slowdown since the start of the current fiscal year.
CFO Brian Olsavsky, speaking on Amazon's third quarter earnings call with investors, explained the fall as being caused by macroeconomic factors that were pressuring Amazon consumers to reduce their spending.
The business informed all of its staff earlier this month that a hiring freeze had been implemented for all Amazon corporate positions.
Zendesk (LON: 0M3F)—350 employees
In a week that saw numerous job losses in the tech industry, Zendesk stated on November 10 that it would be reducing its personnel to save operational costs.
A recent filing with the US Securities and Exchange Commission (SEC) indicates that the 5,450-person global workforce of the CRM software company would lose 300 workers. According to the company's SEC filing, This decision (layoffs) was based on cost-reduction actions aimed to lower operational expenses and sharpen Zendesk's focus on key growth targets.
According to the SEC filing, Zendesk expects the layoffs to cost them around USD 28 million, mostly in severance and employee benefit expenses.
Salesforce (NYSE: CRM)—950 employees
Salesforce, a provider of CRM software, stated that it would let off about 950 employees from its approximately 73,000-person global workforce. The news came after the company let go of at least 90 employees, most of whom were contract workers, in less than a month.
Salesforce initially instituted a hiring freeze in an effort to prevent layoffs, as do many tech businesses. Even though the company had a financially successful year, that policy was abandoned in September, and ever since activist hedge fund Starboard Value bought a stake in the business and demanded that Salesforce raise its margins, the company has been under pressure to make cost-cutting moves.