Since the global pandemic of the new crown virus in 2020, affected by control measures and changes in people's work and lifestyle, global technology companies represented by large Internet companies have experienced a round of rapid expansion.
However, starting from June 2022, the U.S. technology industry began to experience large-scale layoffs, and has intensified since then, so that it has continued from November last year to the present, setting off a rare wave of industry "layoffs."
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"With increased layoffs, falling stock prices, and shrinking market value, large US technology companies have had another difficult week." "The Guardian" wrote in a report a few days ago.
According to data from the Layoffs.fyi website, which tracks the layoffs of technology companies, in 2022, 1,043 technology companies around the world will lay off nearly 160,000 employees, 10 times that of 2021.
Among them, Silicon Valley in the United States has the highest proportion of layoffs.
According to data from the US employment consulting company, in November 2022 alone, the technology industry announced 52,771 layoffs, setting a record since the company began to collect relevant data in 2000.
Entering 2023, the rate of layoffs in the technology industry will further increase.
In less than 40 days, the cumulative number of layoffs at 297 technology companies around the world has reached nearly 95,000.
Still, the pace of layoffs of American technology giants is the most fierce.
In January this year, many well-known technology companies in the United States announced unprecedented layoff plans.
On January 4, Amazon announced that it would lay off more than 18,000 people, and SAIF also said it planned to lay off about 8,000 people.
On January 18, Microsoft announced the layoff of 10,000 employees.
On January 20, Alphabet, the parent company of Google, announced the layoff of 12,000 employees.
On January 25, IBM announced layoffs of 3,900 people.
On January 31, PayPal announced layoffs of 2,000 people.
A cold wave has also hit U.S. tech stock prices.
For the whole year of 2022, the Nasdaq index, which is dominated by technology stocks, has plummeted by 33.1%.
This trend will continue in 2023, with the Nasdaq continuing to lag behind the S&P 500 and the Dow.
Most technology stocks such as Meta, Amazon, Apple, Netflix, and Tesla fell.
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Behind the intensive layoffs of technology companies, there are a series of complicated reasons.
Judging from the financial reports for the fourth quarter of 2022 released by American technology giants not long ago, the sharp drop in corporate net profits and the overall decline in performance are undoubtedly the direct "murderers" that caused this situation.
Among them, Meta's net profit in the fourth quarter of 2022 fell by 55% year-on-year; Alphabet's fourth-quarter net profit fell by 34% year-on-year, the third consecutive quarter of profit decline; and Amazon's fourth-quarter net profit fell to a mere 300 million U.S. dollars, a sharp drop of 98% compared with the 14.323 billion U.S. dollars in the same period last year, and a net loss of 2.7 billion U.S. dollars for the year, compared with a net profit of 33.4 billion U.S. dollars in the same period last year.
What happened to the American technology giants who have been advancing all the way in the past few years?
Analysts in the industry pointed out that due to the impact of multiple adverse macroeconomic factors on the market and the misjudgment of the industry's development prospects, the US technology giants suffered a collective decline in performance.
As the Federal Reserve continues to raise interest rates aggressively, the U.S. economic recession is expected to intensify, and people's consumption costs and corporate capital costs continue to rise.
The deterioration of the macro environment has led to a reduction in market advertising, which has dealt a heavy blow to many technology companies that rely heavily on advertising revenue.
In addition, high energy costs and fluctuations in the exchange rate of the US dollar also put great pressure on enterprises.
The disappearance of the "epidemic dividend" has also "slammed on the brakes" for the aggressive expansion of many technology companies in the early stage.
Take Amazon as an example. As a global e-commerce giant, Amazon’s e-commerce business ushered in explosive growth during the epidemic, and it has conducted large-scale employee recruitment.
As of the end of 2021, the total number of Amazon's employees has increased to about 1.6 million, a surge of 186% in three years, resulting in a large number of redundant personnel and cost expenses. Therefore, facing the cooling of online shopping and business pressure, layoffs have become Amazon's helpless move.
In addition, the U.S. government has used administrative measures to sanction commercial companies for no reason, trying to block normal international business cooperation among high-tech companies, which has also brought negative impacts on U.S. companies that cannot be ignored.
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"The wave of layoffs in Silicon Valley heralds the end of an era of technology giants." An article published by the US "Washington Post" believes that the current phenomenon gives people a feeling that the 10-year bull market in Silicon Valley is over.
Reuters reported that from 2000 to 2003, cheap funds, high investor expectations and abundant cash flow created a huge bubble in the US technology industry.
Today, "the danger may arise again".
And the large layoffs of technology companies "may become a weathervane of greater economic risks", which may herald the arrival of a new Great Recession or economic crisis.
But some analysts believe that the layoffs show that demand in the technology industry has declined after an unsustainable boom, and it is only returning from "abnormal" to "normal".
After 20 to 30 years of rapid development, technology companies represented by Internet companies have experienced slowing growth and weak innovation.
Faced with such a predicament, enterprises not only need technological innovation to find new growth points, but also carry out phased business strategy transformation and organizational transformation to cope with the complex and ever-changing environment. In the structural adjustment of the enterprise structure, Layoffs must be an important option.
From the current point of view, American technology giants are still investing in innovation.
Alphabet Inc's Google has invested nearly $400 million in artificial intelligence startup Anthropic, which is testing a rival to OpenAI's popular ChatGPT, according to people familiar with the matter.
In addition, despite the ferocity of layoffs in the U.S. technology industry, overall demand for skilled engineers remains strong, and laid-off employees can find new jobs more easily.
According to the Wall Street Journal, 79% of U.S. tech workers who were laid off successfully found a new job within three months.
Liang Fan