A Cold Summer For Tech

Layoffs hit the formerly hot tech sector.

Employees at Alphabet Inc.’s Google opened their inboxes on July 12 to see an email from Chief Executive Officer Sundar Pichai. The note contained details regarding the tech giant’s plans to “slow the pace of hiring” for the remainder of 2022. “Like all companies, we’re not immune to economic headwinds,” Pichai wrote.

That same day, Microsoft brass also shared some bleak news: 1% of its 180,000-person workforce would be laid off.

Just three months ago, we were flooded with reports that the job market was hot. The US Department of Labor touted 1.2 million layoffs in April—a record low. Today, the scenario is chilling. Tech companies are either scaling back or cutting staff to offset decreasing revenue and diminishing growth prospects.

The last time Google paused hiring was after the financial crisis more than a decade ago. These days, it’s in the same boat as companies with far less cash, but all of which are considering cost-cutting initiatives. Oracle, Twitter and Tesla meanwhile have been sacking workers.

Meta Platforms appears to be headed that way, too. Managers at Facebook’s parent company were reportedly told to “move to exit” poor performers. This came just days after CEO Mark Zuckerberg warned staff: “We could be facing one of the worst recessions in recent history.”

The precise number of layoffs within the tech sector is difficult to tally, but according to Crunchbase data, the number currently hovers at around 28,000 workers in the US over the course of 2022. That number is expected to go up, all while the number of initial public offerings (IPOs) continues to dwindle.

In the first half of 2022, just $9 billion in volume was raised across 92 IPOs—a 91% decrease from the total number of IPOs in 2021. Of those IPOs, no big tech issues took place in the second quarter. It was also the weakest six-month period since the fourth quarter of 2016 heading into the first quarter of 2017.

Inflation concerns, rising interest rates and geopolitical issues have all contributed to this freeze, and the trend isn’t exclusive to the US—China’s biggest tech company, e-commerce giant Alibaba, is preparing to cut tens of thousands of jobs this year, according to a Reuters report. Meanwhile, Tencent and ByteDance began cutting staff in June.