"Amazon, MS and Other Major Tech Companies Lay Off Over 60,000 Employees"

[Asia Economy New York=Special Correspondent Joselgina] Ahead of the earnings season, the 'layoff storm' triggered by tech companies such as Amazon and Microsoft (MS) continues into the new year. As concerns over an economic recession grow, it is estimated that the number of layoffs at major tech companies over the past year has exceeded 60,000.

[Image source=Reuters Yonhap News]

According to US economic media CNBC on the 18th (local time), Amazon began notifying employees of layoffs starting that day. As announced earlier this month, mass layoffs of about 18,000 employees, mainly in the HR and retail sectors, have begun in earnest. This is the largest scale in Amazon's history since its founding. At the end of last year, major media outlets expected Amazon's restructuring to be around 10,000 employees, but the final number was expanded. This is due to changes in shopping patterns after the pandemic, the Federal Reserve's (Fed) aggressive tightening, and the resulting recession concerns, which have increased management uncertainty.

On the same day, Microsoft (MS), the third-largest company by market capitalization, officially announced it would lay off 10,000 employees, accounting for 5% of its total workforce. Satya Nadella, MS CEO, confirmed in a blog post, "We are in an era of significant change," adding, "We need to adjust our cost structure to align with revenue and customer demands. We will reduce total jobs by 10,000." He also mentioned that some employees could receive layoff notices as early as that day.

Recently, corporate layoffs have been spreading especially among big tech companies. CNBC reported, "Companies that led the stock market bull run over the past decade are entering a new environment, leading to increased layoffs centered on the tech sector," and "Based on corporate statements and media reports, layoffs over the past year have exceeded 60,000." Including lesser-known small and medium-sized enterprises, the layoff scale is estimated to be much larger.

Google Alphabet's life sciences subsidiary, Verily, recently announced it would lay off about 200 employees, approximately 15% of its total workforce. Although Google has not yet announced company-wide layoffs, there are growing expectations that it will soon join this wave of reductions. Google's Q3 revenue and net profit last year both fell short of market expectations. The company is expected to announce restructuring measures for cost reduction soon due to concerns over poor performance.

The world's largest customer relationship management (CRM) software company, Salesforce, announced a restructuring plan to cut 10% of its total workforce in the new year. This decision came just a few months after laying off about 1,000 employees in November last year. Considering Salesforce had 79,000 employees as of December last year, the current layoff scale is estimated at around 7,000. Meanwhile, Crypto.com and Coinbase have also disclosed plans to reduce their workforce by 500 and 2,000 employees respectively, due to the sharp decline in the cryptocurrency market.

Meta Platforms, which will release its Q4 earnings on the 1st of next month, already announced the largest-ever layoffs in November last year. At that time, the restructuring scale reached 11,000 employees, accounting for 13% of the total workforce. Meta Platforms is expected to continue experiencing sluggish sales in Q4 following negative growth in Q2 and Q3 last year. If this poor performance persists, there is speculation that Meta Platforms may undertake additional restructuring.

Twitter also carried out layoffs of about 3,700 employees following Elon Musk's acquisition decision. This accounts for about half of Twitter's total workforce.

In the market, concerns are pouring in that the layoff storm will continue as the outlook for tech companies' earnings deterioration becomes a reality. MS and Amazon, which began restructuring on this day, are scheduled to announce earnings on the 24th and early next month, respectively. Apple, the company with the largest market capitalization, is also set to release earnings on the 2nd of next month, amid concerns over weak Q4 performance due to disruptions such as the Foxconn factory shutdown in China.

Additionally, the global tightening of big tech regulations is another factor darkening the outlook for tech companies. The European Union (EU) imposed massive fines on Meta Platforms at the end of last year for antitrust violations in the online advertising market, intensifying regulatory pressure on big tech. Major foreign media outlets have pointed out that tech companies are likely to face a challenging year this year as well, citing various regulations and recession concerns.