As the year comes to a close, let’s look back at the major tech layoffs of 2022.
The global tech industry has been on a bumpy ride lately, with a slew of layoffs since the beginning of the year. According to a Crunchbase News tally, as of late October this year, over 45,000 tech sector workers in the United States had lost their jobs. The numbers come as no surprise when you consider the soaring inflation rates and that the world might be headed for a recession. Big names, like Meta, Apple and Google, have either stopped hiring staff or begun giving out pink slips to their employees to save money and keep operating margins high during difficult times. To see how the tech industry has been shaken up, let’s look at the major tech layoffs that have happened so far in 2022:
Microsoft is one of the world’s largest and most successful tech companies, but even it is not immune to the effects of the global economic slowdown. In October 2022, the tech giant announced the layoff of nearly 1,000 employees across multiple divisions. The move was a response to the crumbling global economy, which appears to be heading toward a recession.
In a statement, the company said, “Today we had a small number of role eliminations. Like all companies, we evaluate our business priorities regularly, and make structural adjustments accordingly.”
Microsoft had been on a layoff streak, having already announced two layoffs in July and August 2022. These layoffs affected close to 1 percent of its workforce.
After losing subscribers (i.e., 200,000 net subscribers) for the first time in over a decade, Netflix has been struggling to keep up with its competitors for a while now. In May this year, the video-streaming giant dismissed 150 employees and shed dozens of contractors and part-time workers in response to poor earnings and sluggish revenue growth. In June, Netflix announced the second round of job cuts, laying off 300 employees. As per Netflix, the main reasons behind the drop were inflation, fierce competition, Russia’s invasion of Ukraine, increased password sharing between non-paying households and the slowing rollout of broadband.
The Variety reports that most job losses within the company occurred in the U.S. across multiple business divisions. Netflix has approximately 11,100 staff headcounts, and the latest layoffs have impacted roughly 2 percent of the workforce.
In October 2022, Indian ed-tech company Byju’s announced that it would lay off 2,500 employees, about 5 percent of its total workforce, in the next six months. It plans to cut jobs from several departments, including product, content, media and technology. The layoffs will be part of Byju’s plan to focus on brand awareness overseas and optimize budget priorities.
Byju’s is one of India’s leading education technology companies and has been expanding in recent years. However, the company has come under fire for allegedly coercing employees to resign to save money. The layoffs signify that Byju’s is being pressured to cut costs and become more efficient.
In June 2022, the U.S.-based crypto exchange Coinbase announced that it would lay off 1,100 employees, approximately 18 percent of the company’s workforce. The move came as a shock to the cryptocurrency community, with Coinbase being one of the most popular crypto exchanges.
In a company blog post, Coinbase CEO Brian Armstrong attributed the layoffs to the inevitable recession in the U.S. and the “crypto winter”. He also admitted that the company had grown too quickly from having only 1,250 employees at the beginning of 2021 to about 5,000 in three months. “It’s challenging to grow at just the right pace given the scale of our growth (~200% y/y since the beginning of 2021). While we tried our best to get this just right, in this case it is now clear to me that we over-hired,” he said.
The company expects to incur around US$40-45 million in total restructuring expenses, primarily related to employee severance and other termination benefits. Armstrong stated that employees laid off would get at least 14 weeks of severance pay and an additional two weeks for every year of employment beyond their first year. In addition, the company is compensating its employees with other benefits, such as COBRA health insurance and mental health support. They will also have access to Coinbase Talent Hub, which helps laid-off employees find open positions at other firms.
Shopify is one of the most successful Canadian tech companies and has been growing rapidly in recent years. But like many other tech firms, it has been hit hard by the economic slowdown. In July 2022, the Canada-based online marketplace unveiled plans to trim 10 percent of its workforce, or about 1,000 people, due to the lack of growth in the ecommerce space past the pandemic.
In an internal memo, Shopify CEO and founder Tobi Lütke mentioned that the company made a “bet” about the ecommerce growth amid the pandemic that “didn’t pay off”. “What we see now is the mix [of online spending over physical retail] reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful 5-year leap ahead. Our market share in ecommerce is a lot higher than it is in retail, so this matters,” explained Lütke.
Employees impacted by the layoff will receive 16 weeks of severance pay plus one added week for every year they have been with the company.
The global economy is currently in a tough spot, and with that comes the possibility of even more job cuts in the tech industry in the months ahead—until we sail through the economic storm.
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