They're doing it because everyone else is. It is, to a large extent, fashion. It's layoff season.
Ask HN: Why are big tech companies having mass layoffs?
21–30 of 94 posts
Re: Ask HN: Why are big tech companies having mass layoffs?
#22Does someone know a site where I can see the total number of employers of all major tech companies in time? I'm curious to see the difference between today and pre-covid, and also look for a correlation between headcount and market capitalization.
Re: Ask HN: Why are big tech companies having mass layoffs?
#23I mean if you look at the total number of employees by year, all these companies have still added massively to their headcounts in the last 3-4 years. It is not sustainable to continue adding 20-50k employees per year to your payroll.
Most of those companies doing layoffs are still hiring and growing headcount from the new base.
Re: Ask HN: Why are big tech companies having mass layoffs?
#24Amazon, Shopify, Wayfair, Google, Meta: all of these companies make money because e-commerce exists. The higher the proportion of all sales taking place on e-commerce, the more valuable the companies are. For Google and Meta, it's the advertising portion, but it's still impactful. If we track online sales as a proportion of all sales over the last 20 years, there's a pretty stable trend of increase. Then COVID hit, l…
> They all bet that this was a permanent 5-year jump-ahead. They were wrong This is the part that really needs explanation. How was every CEO of every major tech company wrong? Why aren't we having a big tech CEO layoff for massive wrongness? It certainly feels like there's a lot of groupthink here in any case. The Google severance looks pretty generous? That plus the last couple years of overhiring is going to end u…
Groupthink, yes, definitely. The shareholders, through the board, are responsible for hiring and firing management; so I guess shareholders haven't lost confidence in the CEOs yet, or perhaps it's too early still.
Re: Ask HN: Why are big tech companies having mass layoffs?
#25Because the capitalist system we have built demands constant growth. Even a very stable solidly profitable business is no good. A time comes when revenues go down and/or costs go up, that inhibits growth. The companies are so big they could weather the storm. Even if they kept all the employees and increased compensation, they would still be profitable.
But if they did that, they wouldn't be growing. The stock price would go down. The investors and executives would lose a lot of their own net worth. The executives don't have some magical button they can press to magically increase revenues instantly. Most non-labor costs also can't be cut. They don't have much control over the prices of the material goods and resources the company needs to operate. The only easy and instant action they can take is to lay people off. To simply stop spending money on work that isn't generating immediate revenues.
And what do you know, GOOG is up 4% today as of the time of this posting.
Re: Ask HN: Why are big tech companies having mass layoffs?
#26finalcial markets now target efficiency rather than growth.
Re: Ask HN: Why are big tech companies having mass layoffs?
#27Irrespective of the real reason, I don't buy the argument that these companies are preempting a recession. Facebook, Amazon, Alphabet, Apple, Microsoft have an insane volume of cash reserves to the tune of hundreds of billions each company. Unless their are predicting a decade long crisis there is no way this is the real reason staff is getting trimmed, feels more like an excuse rather than a justificatíon at this po…
Even if your business is entirely unaffected a recession, it may still be sensible to do a light layoff before things turn. Especially if you've just gone through several years of an extremely tight labor market.
The reality is most of the big tech companies have had to staff under pretty unfavorable conditions over the past few years. That's meant either scraping the bottom of the barrel in terms of the less talented. Or ballooning TC packages. If you think that all of a sudden it's going to become a buyer's market for employers, then you probably want to free up some spots today. Especially among your weakest performers or your most overpaid.
Re: Ask HN: Why are big tech companies having mass layoffs?
#28Notice how badly the share prices of most such tech firms have fallen in the past year. Investors, Wall Street, and Boards of Directors are for-sure putting loads of pressure on tech firm CEO's to Do Something to fight that trend. Slashing some of the (supposed) payroll bloat that was built up "back when the living was easy" is a great way for a CEO to look like he's Doing Something.
Are we just looking at one year now? Shares of google have doubled in the past five years.
Re: Ask HN: Why are big tech companies having mass layoffs?
#29Amazon, Shopify, Wayfair, Google, Meta: all of these companies make money because e-commerce exists. The higher the proportion of all sales taking place on e-commerce, the more valuable the companies are. For Google and Meta, it's the advertising portion, but it's still impactful. If we track online sales as a proportion of all sales over the last 20 years, there's a pretty stable trend of increase. Then COVID hit, l…
> They all bet that this was a permanent 5-year jump-ahead. They were wrong This is the part that really needs explanation. How was every CEO of every major tech company wrong? Why aren't we having a big tech CEO layoff for massive wrongness? It certainly feels like there's a lot of groupthink here in any case. The Google severance looks pretty generous? That plus the last couple years of overhiring is going to end u…
The most favorable explanation is that they didn't really think it would be permanent. They just needed the headcount at the time, and they don't need it anymore. The rest is just marketing spin to not make it seem so bad.
Now if they all balloon back up to the same headcount in the next year, but with lower salaries, then we will see if the real motive was to lower salaries. Someone had posted on another thread that the federal reserve stated that the goal of recent policy changes was to lower salaries. It's much easier to layoff and rehire, than it is to give out paycuts.
Re: Ask HN: Why are big tech companies having mass layoffs?
#30"Safety in numbers" herd strategy. "Everyone else" is doing it, so they can "get away with it" now without as much "backlash" as they might otherwise experience.
You will also sometimes see people referring to "bets that didn't pan out", but the more accurate term for the situation of having TENS OF THOUSANDS OF PEOPLE as "bets that didn't pan out" is gross mismanagement and active negligence.
Every one of these CEOs should be out as a result.