tech companies between layoffs and hiring freezes

Economic downturn hits tech giants. As during the summer, several companies intend to part with their employees or limit their recruitment.

Caught up by the economic slowdown that is gripping the tech giants, two Silicon Valley companies, Stripe and Lyft, announced on Thursday November 3 major layoffs while Amazon freezes hiring in its offices.

Twitter could follow suit: according to information from the Bloomberg agency, confirmed by a source to AFP, the new owner of the social network, Elon Musk, plans to dismiss half of the workforce to lower costs.

“Too optimistic about growth”

Stripe, a payment services company based in San Francisco and Dublin, has already furloughed 14% of its workforce, explaining to its employees that it has “hired too much for the world we are in today”, according to a communicated.

“We are facing persistent inflation, energy shocks, higher interest rates, shrinking capital budgets and scarcer funding for start-ups,” said chief executive Patrick Collison. .

Stripe has been “far too optimistic about the near-term growth of the digital economy in 2022 and 2023,” he added.

The group plans to return to the level of employment in February, ie 7,000 employees.

The chauffeur-driven car rental company Lyft announced in another press release the layoff of 683 employees, or about 13% of its workforce.

“We are likely to face a recession in the coming year and rideshare insurance costs are rising,” said company co-founders Logan Green and John Zimmer.

Greater caution is needed

Amazon also highlights an “unusual” macroeconomic environment to explain the temporary suspension of all hiring in its offices. The group expects growth of 2% to 8% in the fourth quarter, which is rather weak for its standards.

The hiring freeze signals that the mood in the retail and consumer sectors is changing, said Neil Saunders, distribution specialist for consultancy Global Data.

“The heady days of growth are now over and have given way to an environment in which greater caution is needed to protect profits,” he said in a note.

Another tech giant, Meta (Facebook, Instagram) is also stepping up. Mark Zuckerberg, the company’s boss, indicated last month that the workforce should not increase by the end of 2023, or even decrease slightly. Meta had some 87,000 employees worldwide as of September 30.

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