MS Also "Cautious"... IT Industry Slows Hiring Amid Recession Concerns

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Global tech companies such as Microsoft (MS) and Nvidia are increasingly joining the ranks of 'cautious hiring.' IT companies that competed fiercely to secure talent during the COVID-19 pandemic have suddenly tightened their belts this year amid growing concerns over a sharp economic downturn and the plunge in tech stocks.

According to Bloomberg and other sources on the 26th (local time), Rajesh Jha, MS Executive Vice President, sent an email to employees stating that hiring will be done cautiously and that all new hires must be approved by management. This applies to areas including the PC operating system Windows, enterprise collaboration tool Office, and video conferencing software Teams.

MS stated, "Ahead of the new fiscal year starting in July, we want to ensure that the right resources are allocated to the right opportunities," adding, "This is not a company-wide measure, and we plan to increase the number of employees compared to last year, but resources will be focused where they are needed." Earlier this month, MS announced it would double the budget for salary increases for existing staff and expand stock compensation, but it appears to have shifted toward tightening on new hires.

Previously, Meta Platforms, the parent company of Facebook, ride-sharing companies Uber and Lyft, social networking service (SNS) Snap, and enterprise cloud provider Salesforce also announced plans to reduce or freeze new hiring. The day before, semiconductor company Nvidia said it would slow down new hiring to focus its budget on existing employees amid persistent high inflation. On the same day, U.S. grocery delivery company Instacart announced it would slow hiring in the second half of this year ahead of its initial public offering (IPO), and fintech company PayPal reportedly began laying off dozens of employees working in Chicago, Omaha, Nebraska, Chandler, and other locations.

The reason IT companies are stepping back from new hiring is due to worsening economic conditions. They rapidly grew during the COVID-19 pandemic, increasing hiring and expanding compensation over the past two years, but concerns over an economic downturn caused by high inflation, tight monetary policies, and the Russia-Ukraine war have increased the need to respond. The continued plunge in tech stocks this year has also influenced the need to reduce costs and improve profitability.

In addition to reducing hiring to cut costs, IT companies are also cutting various other expenses. E-commerce giant Amazon decided yesterday to delay new construction and sublease logistics warehouses to resolve excess space secured during the COVID-19 period. Amazon CEO Andy Jassy emphasized that due to slowing retail sales and rising costs in the first quarter, the company is "focused on restoring healthy levels of profitability." Uber CEO Dara Khosrowshahi sent an email to employees on the 8th stating that the company would reduce marketing and incentive expenses and focus on becoming a more efficient company.