All firing and no hiring: Why big corporations are sacking employees

The looming recession and a post covid world is the reason behind the upsurge in laying off a massive workforce by the tech giants. Amazon will lay off around 10,000 employees and Facebook deals with declining revenue whilst Twitter's new head Elon Musk decides to cut off the company's employees by half are woes faced by the tech industry now, writes ETV Bharat's Ayushmaan Pandey.

Hyderabad: If 10,000 employees are the digits of the workforce Amazon decides to terminate in the coming days as reported by the New York Times, it would be the biggest in the company's history. To put into perspective the impact of the sheer numbers, it would mean laying off "three per cent of the company's corporate employees and less than one per cent of its global workforce of more than 1.5 million, which mainly consists of hourly workers," a report said.

All this is in the back of Twitter's new head Elon Musk deciding to cut the numbers of the company's employees by half to help the platform's worsening financial slump. "Let that sink in", for now. Even as Meta's announcement of laying off 11,000 employees left the tech world fluttering, the reasons behind the upsurge in sackings can be multiple, a few can be attributed to post Covid world and the looming recession.

"Facebook deals with declining revenue and broader tech industry woes," CEO Mark Zuckerberg said in a letter to employees. "Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that."

The statement by Zuckerberg brings in plenty of insights as to why firings are on the uptick while hiring comes to a freeze, something that witnessed a sharp rise during the pandemic. Consider this: the consumption (demand) of tech companies soared during the pandemic where people were ordering more from companies like Amazon and spending more time on social media. The consumption necessitated the hiring of more employees in these companies due to the rising demand for services.

And now that the cat is out of the bag, where consumers have started venturing into the outside world with relaxation in rules by various countries, the demand for the service has gone down significantly. Multiple companies relied on changed consumer behaviour over time which didn't happen in the post-pandemic world.

It can be a case of point where Amazon would have witnessed increased traffic ahead of Christmas and the holidays, but the company's decision also indicates a low consumer sentiment. Reports have also indicated reduced hiring to rising interest rates, economic downturn, and regulatory challenges.

In the case of Facebook, several other causes can be factored in for reduced revenues that culminated in the eventual sacking of employees. Apple's change in privacy features has come as a massive hit to Facebook's revenues after the company decided to oust the tracking devices.

There have been indications that the iPhone manufacturing company may potentially lose USD 12.8 billion this year due to App Tracking Transparency (ATT). With the increase in iPhone users, and people having concerns about their privacy, the company's CEO Tim Cook has been aggressively pushing the plot which has resulted in a 20 percent cent dip in advertising which has increased the net loss to social media companies such as Facebook.

Also, investors' mistrust in Zuckerberg's newly laid vision where he has categorically stated about the replacement of social media with metaverse has not helped the company either. The layoffs also signal that economic recession may hit sooner than thought and if instances like slowing down in the sale of Apple products among others are anything to go by, reduced demand for non-essential items virtually confirms the arrival of not-so-good times ahead.