Microsoft and Amazon announces large-scale layoffs

Tech businesses have not had a fantastic month. Microsoft has announced its first major layoffs in several years, following in the footsteps of several other industry titans.

Including only Amazon and Microsoft, 28,000 jobs were lost in January. Even though the month of November 2022 is about to end, we have yet to witness the highs of over 50,000 employees across 217 organizations being let go.

The fundamental issue is whether this signals a bigger tech market problem or merely a normal correction following a prosperous couple of years. There is undoubtedly more to these planned culls than meets the eye.

The Microsoft layoffs

Microsoft CEO Satya Nadella announced yesterday (Jan 18) that the company will lay off 10,000 employees. Microsoft has over 220,000 employees worldwide, so the layoffs represent about 5% of its entire workforce.

According to Nadella, "we're now seeing [customers] manage their digital investment to achieve more with less," which he attributed to the changing macroeconomic environment. Microsoft intends to deduct $1.2 billion for severance compensation, lease consolidation, and adjustments to its hardware lineup.

The corporation is scheduled to release its financial results the following week, although growth is anticipated to be much slower than in prior years. Some others worry that the 5% cut indicates there may be further layoffs in 2023.

The Amazon cull

After Amazon announced its largest-ever employment layoff to start the year, Microsoft made its statement. The global retail behemoth announced plans to lay off 18,000 workers.

In a blog post, CEO Andy Jessy stated that the conglomerate's store and HR divisions were primarily impacted by the employment decrease. The end of 2022 saw the start of earlier layoffs at Amazon's Devices and Books division.

Although the figure is far higher than the 10,000 employment functions that were expected to be eliminated, it is evident that Amazon has its sights on the long-term goal. Jassy said that "long-lasting organizations go through many phases." They don't constantly have huge population growth going on.

Is the rest of tech affected?

The first of the big tech behemoths to disclose job layoffs was Meta, which detailed a plan to lay off around 13% of its workers between the parent business and WhatsApp. There are about 11,000 employees in total.

CEO Mark Zuckerberg cited a change in emphasis and market factors as the causes. He wrote in a blog post, "In this new climate, we need to become more capital efficient."

A 10% staff decrease has been announced by Salesforce, which has over 80,000 employees worldwide. The whole cryptocurrency sector is also seeing significant job losses, with Coinbase and Crypto.com announcing layoffs most recently.

It's noteworthy to note that two other significant Big Tech participants haven't yet taken any news-making moves. So far, no big layoffs have been reported by Apple (AAPL, +2.4%). Instead, "across some areas," the corporation has implemented a hiring freeze.

Although Google employees are reportedly dissatisfied with the new employee assessment procedure, GoogleGOOG +1.9% hasn't officially started a mass cull. The tougher scoring scheme is perceived by many as a portent of worse things to come.

Alphabet, the parent company of Google, announced a 27% decline in Q3 2017 profits to $13.9 billion. CFOCFO +0.4% was reported in a 2022 earnings conference. "Our initiatives to reduce the rate of recruiting will become more obvious in 2023," said Ruth Porat. That seems really alarming.

Twitter is another option. Elon Musk, a clever millionaire, playboy, and philanthropist, has taken over the firm, and since then, around half of its 7,500 global employees have been let go. However, that is more of an Elon issue than a market turbulence scenario.