Tech giants are downsizing at a rapid rate, highlights Alan Price.
Google, Microsoft, and Meta have significantly shrunk over the past few months. And those are just the headlines – according to the Layoffs.fyi website, over 250,000 global tech workers have lost their job since 2022.
It may go without saying, a dismal economic landscape and recession fears are driving factors. However, CEO attitudes towards growth also play a role in these dramatic downsizings. Overspending and clumsy valuations have exposed these household names to be highly inefficient enterprises.
This will inevitably lead to a major shift in decision-making across the tech sector and beyond.
As tech entrepreneurs begin to rethink their strategy, business leaders within other industries should look and learn. So, here is what the recent tech layoffs could signal for the future…
Your financial forecasting will be more cautious
The onslaught of layoffs was, in part, due to CEOs miscalculating their own success.
Take Meta. The company was overoptimistic about its future growth and overspent as a result. CEO Mark Zuckerberg blamed his long-term expectations for growth on the uplift in profits he saw during the pandemic:
“Many people predicted this would be a permanent acceleration,” he said, “I did too, so I made the decision to significantly increase our investments.”
Salesforce CEO, Marc Benioff, valued his business with a similar thought process:
“As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that.”
As a result, both tech giants had to make substantial job cuts to bolster their profitability – with Meta laying off a shocking 13% of its workforce.
These episodes should leave any business owner rethinking their own forecasting model. Both CEOs modelled their future growth on a relatively new and sudden spike in revenue. This is a high-risk strategy – because you won’t know whether it’s success you can sustain over the long term.
Instead, business owners should add more caution to their financial forecasting. This will involve carefully mapping fluctuations over a longer period before hiking up investment. That way, you’ll have more confidence you can maintain your success.
The bottom line? Using short-term accelerations to predict long-term growth is a risk that’s simply not worth taking.
Your approach to hiring will change
Tech businesses experience intense success – and use that success to fuel further growth.
This involves quickly hiring swathes of workers to innovate new products and expand into different areas. Often, to get ahead of competition, tech firms do this ahead of a future demand.
However, as recent layoffs have proved, that demand doesn’t always materialise. Salesforce, among many other firms, hired far too many new employees, and far too fast.
The damaging impact of layoffs will make tech entrepreneurs think twice about premature hiring. This may mean waiting until the demand for the role is more tangible, instead of hiring in anticipation of future growth.
This might also mean the roles themselves could change. Roles with titles like “business strategist “and “new business manager” are focused on innovation and creating new opportunities. But considering the over-optimistic hiring seen in tech firms – coupled with an unpredictable financial landscape – managers may be more reserved about these future-focused roles.
Plus, managers might also want to hire for broader roles instead of filling highly niche positions. Before Elon Musk took over Twitter, developers took on incredibly specialist roles – like managing a small feature on the platform. Musk then controversially sacked 8,000 workers, claiming there was “no choice, when the company is losing over $4m a day”.
Whether or not this is was the correct approach, it was clear that Twitter had a vast surplus of roles. And while this means staff are incredibly proficient in one area, it has its downsides. When workers have narrow responsibilities, it can lead to an inward-looking and inefficient culture.
Going forwards, it could be the case that managers look to hire multiskilled candidates who take on more responsibilities. Ultimately, that’s the more cost-effective option.
With less urgency to grow quickly, managers will slow down their hiring and consider roles more carefully. This may lead to lengthier interview processes, more background research, and an emphasis on quality over quantity.
You will rethink workplace perks
When you imagine Google headquarters, you think perks. Fitness classes, massage therapists, and nap pods are just some of the perks employees enjoy on-site.
Businesses across the world attempt to follow in their footsteps to attract top talent. So much so, that efforts like ping-pong tables and free beer are commonly referred to as little more than a cliché.
However, perks like these became less important during the pandemic. When remote working became default, Glassdoor reported that only 4 percent of UK reviews referred to workplace benefits in 2022 – significantly down from 8.3 percent in 2019.
And now, with the backdrop of tens of thousands of job losses, it feels inevitable that these perks can’t remain in place. In a cost-cutting effort, Meta removed its popular laundry service and limited free meals.
As the rest of the world looks on, it is likely to follow suit. Flashy office perks were once a defining characteristic of Silicon Valley giants – so when even they’re starting to shed them, why would the rest of us hold onto them?
Instead, employers may now begin to look past office perks and focus on different methods of retaining staff. With more demand for flexibility than ever, managers should seek to improve employee wellbeing with a healthier work-life balance. This could involve offering remote work, flexitime, or staggered hours.
Along with being more cost-efficient, these ‘perks’ are more likely to improve employee morale far beyond costly office treats.
Alan Price is Chief Operations Officer of the Peninsula Group.
Alan is responsible for the leadership of the Group’s operations strategy, overseeing 100,000 client monthly service interactions and client experience.
He also holds a number of non-executive positions across the Group companies, while UK maintaining a Group operational overview and Group HR responsibilities.
Alan is a Chartered Fellow of the CIPD with 18 years’ experience in employee relations, a Chartered Manager and Fellow of the CMI, a certified practitioner and Fellow of the AHRI (Australian Human Resources Institute), and a member of the Canadian Human Resource Professional Association.
Having demonstrated a significant contribution to business and society, he is also a Fellow of the Royal Society of Arts.
In 2003, Alan was appointed to her Majesty’s Court and Tribunal Service and was one of the youngest judicial appointments to the Employment Tribunal Service, which he continues to hold.
For the last four years, Alan has been a charity trustee and Non-Executive Director for the global HR professional body, the CIPD, which represents over 140,000 HR professionals worldwide.
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