Big tech
's 2024 started with a paradoxical twist: despite booming sales and profits,
job cuts
rippled through industry giants like Google, Amazon, and Meta. The big job cuts at the technology industry’s largest companies trickled into the first month of 2024.
started the year with layoffs of several hundred employees. The search giant has already announced three rounds of job cuts.
CEO Sundar Pichai to employees has said that there may be more job cuts in the coming months, but not the same number as 2023.
Amazon
has announced cutting hundreds of jobs in its Prime Video department. Meta quietly thinned out middle management. Microsoft also cut 1,900 jobs in its video game division. What's driving this disconnect?
Pandemic boom, and the bust that followed
Fueled by surging demand, these companies added a staggering 900,000 jobs from 2019 to 2023. But as the boom faded, they shed roughly 112,000 positions. Yet, they remain significantly larger and more profitable than pre-pandemic. When that boom ended, they were forced to adjust. Meta, Amazon, Microsoft, Google and Apple cut about 112,000 jobs from their respective peaks in 2021 and 2022. But they were still much bigger and more profitable than before the pandemic began. The five companies employ 2.16 million people, 71% more than they had before the pandemic. Combined, they generated $1.63 trillion in sales in their most recent fiscal years, about 81% more revenue than five years earlier.
The need to invest in AI
Enter generative AI, a game-changer that can answer questions, generate images, and write code. Tech giants are now scrambling to hire AI engineers, with job postings surging in 2024. This shift has led to cuts in other areas, like Google's AR unit and Meta's program managers. As a report in NewYork Times said, "Now, instead of hiring thousands of people every quarter, the companies are spending billions to build AI technology that they believe could one day be worth trillions." Mark Zuckerberg, CEO of Meta, said in a call with analysts last week that his company had to lay off employees and control costs “so we can invest in these long-term, ambitious visions around AI.” He added that he had come to realize that “we operate better as a leaner company.”
Companies like Amazon (doubling its workforce) are now "holding the line" on headcount, prioritizing efficiency. Google warns of rolling layoffs while seeking top AI talent. Apple, known for restraint, used attrition and stricter reviews to reduce its workforce by 3,000.
The Future Unwritten
Wall Street rewards these giants, their market value soaring by $3.5 trillion. Broader tech employment is rebounding, with a 3.3% unemployment rate. But questions linger: can AI justify the cuts? Will the gamble pay off? Only time will tell.
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