Tech firms have slashed nearly 100,000 jobs this year

Technology companies have laid off nearly 100,000 staff so far this year as they desperately try to cut costs.

On another bleak day, Ebay became the latest online giant to slim down its workforce, announcing plans to sack 500 staff or roughly 4 per cent of its headcount.

Jamie Iannone, chief executive of the platform best known for selling second-hand goods, said Ebay wanted ‘additional space to invest and create new roles in high-potential areas’ in the face of economic uncertainty.

Ebay became the latest online giant to slim down its workforce, announcing plans to sack 500 staff or roughly 4% of its headcount

Its announcement is just the tip of a very big iceberg. In the last few weeks, Google parent Alphabet, Amazon, Zoom, Microsoft and Salesforce have all made significant cuts following a pandemic hiring spree.

‘Companies that last a long time go through different phases. They’re not in heavy people expansion mode every year,’ Amazon boss Andy Jassy told staff after announcing the biggest cull in its history.

‘This year’s review has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years.’

Likewise, pandemic darling Zoom, which boomed during lockdown as millions worked from home, said it would cut 15 per cent of its staff.

In a note to ‘Zoomies’ this week, chief executive Eric Yuan said he was ‘accountable’ for mistakes and would reduce his £911,000 salary by 98 per cent to prove it.

Zoom has struggled to thrive in the post-pandemic world as economies reopen and people return to the office and meet friends and family in person.

According to data tracker Layoffs.fyi, over 98,000 people have been sacked since the start of 2023, adding to the 159,786 people laid off in 2022. 

Social media giants Snapchat and Facebook owner Meta were among the first to tumble last year, feeling the sting of shrinking advertising budgets and a Nasdaq tech sell-off driven by rising US interest rates that cast doubt over their lofty valuations.

A bridge too far: Many of America’s biggest tech companies are based in San Francisco (pictured)

Danni Hewson, financial analyst at AJ Bell, said companies will now be looking to follow the likes of Apple, which she said has achieved the ‘Goldilocks scenario for recruitment’ by hiring ‘not too many, not too few, but just the right number’.

Although Apple’s situation is helped by 2021 privacy changes that made it more difficult for rivals to track user behaviour, subsequently hitting core revenue streams, Hewson says companies will be on the lookout for their own magic formula.

Victoria Scholar, an analyst at Interactive Investor, said layoffs had lifted share prices.

‘After last year’s tech wreck, investors are encouraged by the recent response from Big Tech to lay off staff in an attempt to batten down the hatches in preparation for a period of economic weakness,’ she said.

‘This is laid bare by the performance of tech stocks so far this year with Meta, Microsoft, Alphabet and Amazon logging double-digit percentage gains since the start of January.’

The sense is that these decisions are a step that needed to be taken to fund the future.

For instance, Uber laid off thousands of staff during the pandemic when its ride-hailing business sank and its food delivery arm boomed.

It yesterday posted its ‘strongest quarter ever’ and has said it will not make major headcount changes this year.

Dan Ives, an analyst at investment bank Wedbush, said although companies are cutting costs, money will be reallocated into funding innovation, such as artificial intelligence.

He said: ‘It’s a tale of two cities for Silicon Valley. On the one hand, firms over-hired during the pandemic, and then the clock struck midnight on hyper-growth and we are seeing layoffs. 

On the other hand we are seeing an AI arms race play out globally in the US and China, and Microsoft’s ChatGPT deal was the first shot fired in this battle.’

Tech expert Matt Navarra said there is a ‘reshuffling the deck’ to focus on generative AI and the metaverse – two areas that could reinvent the tech world.

As more firms swing the axe, the question remains, when will these cuts end and who, and what, will come out on top?

This post first appeared on Dailymail.co.uk