Tech layoffs balloon in January as Wall Street rally lifts Alphabet, Meta, Microsoft to records

The
S&P
500
is
trading
at
a
record
and
the
Nasdaq
is
at
its
highest
in
two
years.


Alphabet
shares
reached
a
new

pinnacle
on
Thursday,
as
did


Meta
and


Microsoft,
which
ran
past
$3
trillion
in
market
cap.

Don’t
tell
that
to
the
bosses.

While
Wall
Street
cheers
on
Silicon
Valley,
tech
companies
are
downsizing
at
an
accelerating
clip.
So
far
in
January,
some
23,670
workers
have
been
laid
off
from
85
tech
companies,
according
to
the
website

Layoffs.fyi.
That’s
the
most
since
March,
when
almost
38,000
people
in
the
industry
were
shown
the
exits.

Activity
picked
up
this
week
with


SAP
announcing
job
changes
or
layoffs
for

8,000
employees
and
Microsoft
cutting

1,900
positions
in
its
gaming
division.
Additionally,
high-valued
fintech
startup

Brex
laid
off
20%
of
its
staff
and


eBay
slashed
1,000
jobs,
or
9%
of
its
full-time
workforce.
Jamie
Iannone,
eBay’s
CEO,

told
employees
in
a
memo
that,
“We
need
to
better
organize
our
teams
for
speed
—
allowing
us
to
be
more
nimble,
bring
like-work
together,
and
help
us
make
decisions
more
quickly.” 

Earlier
in
the
month,
Google

confirmed
that
it
cut
several
hundred
jobs
across
the
company,
and


Amazon
has
eliminated

hundreds
of
positions
spanning
its
Prime
Video,
MGM
Studios,
Twitch
and
Audible
divisions.


Unity
said
it’s
cutting
about

25%
of
its
staff,
and
Discord,
which
offers
a
popular
messaging
service
used
by
gamers,
is

shedding
17%
of
its
workforce.

The
swarm
of
activity
comes
ahead
of
a
barrage
of
tech
earnings
next
week,
when
Alphabet,
Amazon,
Apple,
Meta
and
Microsoft
are
all
scheduled
to
report
quarterly
results.
Investors
lauded
the
cost-cutting
measures
that
companies
put
in
place
last
year
in
response
to
rising
inflation,
interest
rates
hikes,
recession
concerns
and
a
brutal
market
downturn
in
2022.
Even
with
an
improving
economic
outlook,
the
thriftiness
continues.

Layoffs
peaked
in
January
of
last
year,
when
277
technology
companies
cut
almost
90,000
jobs,
as
the
tech
industry
was
forced
to
reckon
with
the
end
of
a
more
than
decade-long
bull
market.
Most
of
the
rightsizing
efforts
took
place
in
the
first
quarter
of
2023,
and
the
number
of
cuts
proceeded
to
decline
each
month
through
September,
before
ticking
up
toward
the
end
of
the
year.

One
explanation
for
the
January
surge
as
companies
budget
for
the
year
ahead:
They’ve
learned
they
can

do
more
with
less.

At
Meta,
in
CEO

Mark
Zuckerberg’s
words,
2023
was
the

“year
of
efficiency,”
and
the
stock

jumped
almost
200%
alongside
20,000
job
cuts.
Across
the
industry,
artificial
intelligence
was
the

rallying
cry
as
new
generative
AI
technologies
showed
what
was
possible
in
automating
customer
service,
booking
travel
and
creating
marketing
campaigns.

The
AI
hype
raised
concerns
in
many
corners
of
the
economy
about
the
declining
need
for
human
labor
as
technology
gets
smarter.
But
it’s
having
a
more
immediate
impact
on
the
workforce.
AI
demand
is
so
great
that
some
tech
companies
are
cutting
headcount
in
parts
of
the
business
to
invest
more
heavily
in
developing
AI
products.

“These
companies,
in
general,
are
reducing
numbers
of
employees
associated
with
product
lines
or
divisions
that
have
not
been
successful
because
they
want
to
reposition
themselves
for
AI,”
said
Art
Zeile,
CEO
of
DHI
group,
which
owns
the
tech
recruiting
platform
Dice.

Zeile
was
quick
to
point
out
that
the
cuts
we’re
seeing
this
January
are
far
below
the
numbers
from
a
year
prior,
adding
that
“it’s
not
the
kind
of
news
that
it
was
earlier.”

Company
execs
choose
different
verbiage
to
convey
their
downsizing
message
to
employees
and
investors,
but
the
through
line
is
that
they’re
trying
to
become
more
focused.

Microsoft
Gaming
CEO
Phil
Spencer
said
his
company’s
layoffs
were
part
of
a
larger
“execution
plan”
that
would
reduce
“areas
of
overlap,”
a
little
more
than
three
months
after
Microsoft

closed
its
acquisition
of
Activision
Blizzard.
SAP
said
its
restructuring
is
designed
to
increase
“focus
on
key
strategic
growth
areas,
in
particular
Business
AI.” 

Alphabet
CEO

Sundar
Pichai
told
employees
in
a

memo
titled
“2024
priorities
and
the
year
ahead”
that,
“we
have
ambitious
goals
and
will
be
investing
in
our
big
priorities
this
year,”
and
that “to
create
the
capacity
for
this
investment,
we
have
to
make
tough
choices.”
And
at
Amazon’s
Audible
unit,
CEO
Bob
Carrigan
said
“getting
leaner
and
more
efficient”
is
the
way
the
company
needs
to
operate
for
the
“foreseeable
future.”

Nigel
Vaz,
CEO
of
consulting
firm
Publicis
Sapient,
told
CNBC
that
some
companies
are
probably
looking
at
the
boon
that
Meta
and


Salesforce
got
after
their
hefty
cost-cutting
measures
last
year.

Salesforce

cut
about
10%
of
its
workforce
in
January
2023,
and
the
stock
ended
up
nearly
doubling
for
the
year,
its
best
performance
since
2009.
Following
Meta’s
announced
cuts,
the
company’s
shares
had
their
best
year
since
Facebook
debuted
on
the
Nasdaq
in
2012.

“I
look
at
Meta
and
Salesforce
as
only
two
examples
of
companies
that
needed
the
impetus,”
Vaz
said.
“The
minute
they
got
the
impetus,
then
demonstrated
what
happens
when
you
act
with
edge
on
stuff
that
you
probably
knew
you
needed
to
do.”

The
layoffs
aren’t
limited
to
the
tech
industry.
Embattled
bank


Citigroup said
earlier
this
month
that
it
was

cutting
10%
of
its
workforce.
And
on
Thursday


Levi
Strauss
said
it will

lay
off
at
least
10%
of
its
global
corporate
workforce
as
part
of
a
restructuring.
Paramount
became
the
latest
media
brand
to
announce
cuts,
with
CEO
Bob
Bakish

saying
on
Thursday
the
business
needs
to
“operate
as
a
leaner
company
and
spend
less.”

Within
tech,
a
wide
variety
of
companies,
big
and
small
and
spanning
the
consumer
and
enterprise
markets,
are
eliminating
jobs.

At
the
large
publicly
traded
companies,
there’s
an
“intense
focus”
on
profitability,
margins
and
cost
cutting,
said
Tim
Herbert,
chief
research
officer
at
CompTIA,
which
tracks
trends
across
the
tech
sector.
But,
he
added,
there’s
an
“enormous
base”
of
small
and
mid-sized
tech
companies
across
the
U.S.,
and
that
in
some
cases
contractors,
freelancers
and
overseas
workers
are
being
hit
particularly
hard.

However,
Herbert
echoed
Zeile
in
noting
that
there’s
not
enough
data
to
get
too
panicked
about
the
activity
in
January.

“There’s
a
lot
of
nuance
to
the
data,
so
we
always
want
to
be
a
little
bit
careful
not
to
read
too
much
into
it,”
Herbert
said.
“We
don’t
want
to
ever
get
too
hung
up
on
just
one
month
of
data,
or
even
two
months
of
data.”

While
investors
will
get
a
clearer
picture
on
the
near-term
outlook
for
business
and
consumer
spending
in
tech
earnings
announcements
next
week,
the
latest
macroeconomic
reports
provide
some
reasons
for
optimism.

The

economy
grew
at
a
faster-than-expected
pace
in
the
fourth
quarter,
and
inflation
cooled
over
that
stretch,
the
Commerce
Department
reported
Thursday.

Gross
domestic
product
increased
at
a
3.3%
annualized
rate
in
the
quarter,
topping
the
Wall
Street
consensus
estimate
for
a
gain
of
2%.
Meanwhile,
consumer
prices
rose
2.7%
on
annual
basis
in
the
quarter,
down
from
5.9%
a
year
ago.
Inflation
has
been
easing
from
its
pandemic-era
peak
in
mid-2022.

The
market
has
been
rallying,
as
investors
see
those
key
numbers
leading
to
the
likelihood
of
Federal
Reserve
rate
cuts
in
2024
after
the
central
bank
lifted
its
benchmark
rate
11
times
in
less
than
two
years
to
fight
inflation.

Vaz
said
many
corporate
leaders
are
optimistic
over
“inflation actually
meaningfully
starting
to
come
down”
at
the
same
time
that
“spending is
essentially
coming
back
in
so
many
sectors.”

—
CNBC’s
Michael
Bloom,
Annie
Palmer
and
Jennifer
Elias
contributed
to
this
report

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