From the ecommerce colossus AmazonFacebook, the social networking star in America, is US techFirms that once grew without restraint have resisted the temptation to hire in order to withstand turbulent times.
Internet giants that enjoyed a boom during the pandemic have suffered from inflation, war, supply line trouble, and people returning back to pre-COVID lives.
Big tech companies reported earnings for the first three months this year, a common theme.
Meta, parent of Facebook, stated to analysts that the company was revising its hiring goals in order to continue to see a bright future.
Amazon, America’s second largest employer, has revealed that its ranks have become overly bloated after it ended last year with twice the number of workers than it had in 2019.
Twitter confirmed that it had stopped hiring and showed some senior executives how it was exiting. It is now up for a takeover by Elon Tesla, the richest man on the planet.
Uber’s CEO Dara Khosrowshahi stated that hiring employees will be treated as a privilege according to an email CNBC received from employees.
Big tech companies have avoided budget-driven layoffs but that is not true for stock trading platform Robinhood and Cameo. Cameo sells custom video messages from celebrities.
Robinhood stated in April that it would cut almost 350 positions, which is 9 percent of its workforce. According to The Information, Cameo recently terminated the contracts for 80 employees.
There are many reasons for hiring curbs or freezes.
Meta, for example blamed Apple’s software on its popular mobile devices. This tweak blocks the gathering of user information to target ads better.
Uber reported that it suffered a large loss in the first quarter of this year despite a rebound from its ride-sharing business.
According to the earnings report, the loss was almost entirely due to the revaluation in Grab and Didi in Asia as well as US-based autonomous driving company Aurora.
However, many internet firms shared a common factor: the rapid hiring that took place during the pandemic caused over-staffing.
Many tech companies have been meeting this demand with notable growth of digital services. As such, they have recruited and grown their businesses notably over the past two year, said Terry Kramer (an assistant professor at UCLA business school).
A reasonable portion of what we see now, I believe, is the normal maturity and adoption of technology – where companies are unable/dont need continue growing at that rate.
Inflation is another factor that weighs heavily. It has driven up overall costs and tightened consumer budgets.
Daniel Ives, Wedbush analyst advised investors not to be afraid of a recurrence in the Dot-com collapse of the late 90s.
Ives clarified that this is not a Dot-com Bubble 2.0 in a note addressed to investors.
It is a huge overcorrection in a higher-rate environment that will cause a bifurcated technology tape with clear haves/have-nots