Tech companies have cut 34,000 jobs since start of year , reshuffling resources to invest in new areas such as generative AI
Continuous Health Transformation . Institute
Joaquim Cardoso MSc
February 12, 2024
What is the message!
Microsoft, eBay and PayPal have each cut thousands of jobs since the start of the year Companies are reshuffling resources to invest in new areas such as generative AI while also showing shareholders a focus on cost discipline
Executive Summary
Tech companies have initiated significant job cuts totaling 34,000 since the beginning of the year, as they realign their workforce to prioritize investments in emerging technologies like generative artificial intelligence (AI).
Major players such as Microsoft, Snap, eBay, and PayPal have streamlined their operations, reflecting a broader trend in the industry towards cost discipline and strategic restructuring.
Examples and Statistics:
- Layoffs.fyi, a website tracking industry attrition, reports that Microsoft, Snap, eBay, and PayPal have collectively eliminated hundreds or thousands of positions since January.
- In 2023, the tech sector witnessed a staggering 263,000 job cuts, highlighting a prolonged period of over-investment during the pandemic.
- Companies like Amazon’s Twitch platform have shed hundreds of jobs this year, emphasizing a shift towards prioritizing core divisions and new growth areas.
- Meta, formerly Facebook, has reduced its workforce by over 20,000 since late 2022, redirecting resources towards developing a “metaverse” and investing in generative AI.
- SAP announced a company-wide transformation in January, including the elimination of around 8,000 jobs, as it intensifies its focus on AI, signaling a strategic realignment rather than net job loss.
- Snap, grappling with a decline in digital advertising, announced a 10% reduction in its global workforce, reflecting concerns about its long-term viability.
In 2023, the tech sector witnessed a staggering 263,000 job cuts, highlighting a prolonged period of over-investment during the pandemic
Conclusions:
- The surge in job cuts underscores a broader industry shift towards optimizing operations, focusing on cost efficiency, and investing in emerging technologies like generative AI.
- Companies are reevaluating their workforce compositions to align with strategic priorities, including divesting from non-core divisions and reallocating resources to fuel innovation and future growth.
- While some layoffs reflect existential challenges, such as Snap’s struggles with advertising revenue, others signal proactive measures to stay competitive in a rapidly evolving market.
Recommendations:
- Tech companies should continue to prioritize strategic investments in areas like generative AI while balancing cost discipline to sustain long-term growth.
- Proactive workforce planning and reskilling initiatives can help mitigate the impact of layoffs, ensuring a skilled workforce capable of driving innovation and adaptation to industry shifts.
- Transparency and communication with employees are crucial to managing uncertainty and fostering a culture of resilience amid periods of organizational change.
Source — Adapted from FT “Tech companies axe 34,000 jobs since start of year in pivot to AI”
