Excessive spending by Big Tech will eventually be curtailed.
Companies like Meta, Google, and Microsoft are seeking to reign in excessive expenses in the wake of a string of dismal financial reports, inflation, and worldwide upheaval that has led to bruised tech equities.
Over many years, large technology firms have battled it out by offering higher salaries and more benefits to attract and retain talent in an increasingly competitive job market. Budget cuts, new performance objectives, and even layoffs have replaced the seemingly continuous rounds of recruiting and allocations for staff trips, free food, and corporate merchandise.
An entire generation of IT employees has grown up in a period of constant economic expansion and a rising stock market, so this is a new experience for them. These new policies are “straight out heresy,” as Bill Gurley, a senior venture financier, described it in June.
“As high-tech businesses scrambled to attract and retain talent during this rate-induced boom, they began offering perks and a work environment reminiscent of Disney World.”
At Meta, for instance, there was considerable uproar when, early this year, the firm chose to restrict the availability of complimentary lunches at the workplace and discontinued its washing service. A hiring freeze was implemented within two months. Managers have reportedly been warning staff of future layoffs of up to 20%, which has caused widespread concern among workers. Read also: Apple’s Profits Keep Rising Even as the Economy Fails to Boom
Alphabet CEO Sundar Pichai recently informed shareholders that the company is reevaluating its expenditures and initiatives “at all scales quite granularly.” The business has also implemented a temporary employment freeze. When speaking to staff in August, Pichai expressed “genuine worries that our productivity as a whole is not where it needs to be for the numbers we have.”
It was previously communicated to managers that they should only allow “business vital” staff travel and team offsites. In April, Lizzo was scheduled to play a private concert for employees as a reward for coming back to work.
In a recent open letter, Brad Gerstner, CEO of Altimeter Capital, suggested that Meta cut costs, particularly in its pursuit of the metaverse, because “it is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people.”
Further, I’d argue that these already impressive businesses would function even better and more effectively if they didn’t have to deal with the added bureaucracy and inertia that comes with hiring so many new workers so quickly.
Elon Musk, a notoriously demanding and erratic boss, is said to be taking over Twitter this week and planning massive layoffs. The company’s employees, acting anonymously, felt an open letter with a list of “demands” would help them keep their jobs.
Instead, the chief privacy officer of the corporation sent out an email to all employees detailing the “risks” of signing the contract. According to Insider’s source, any references to it were swiftly removed from internal Slack channels. Read also: The Biggest Tech Firms Are Flashing Red Lights About the Economy
Popular tech and financial sector commentator Bucco Capital termed the tweet “delusional,” suggesting it might be “the actual and ultimate swan song of the decade-long bull market.”
The loss of benefits isn’t the only thing young IT employees have to worry about. They could lose their jobs if that happens. The likes of Netflix, Microsoft, Oracle, Salesforce, and Snap have all been involved in recent rounds of layoffs.
According to Dan Ives, a tech analyst at Wedbush, “Silicon Valley is experiencing layoffs across the board for the first time since 2008.” The technological world is approaching “winter.” Read also: Do You Want to Reduce Crime? Don’t Make Minnesota Turn Red
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