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Ask HN: Why are big tech companies having mass layoffs?

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Re: Ask HN: Why are big tech companies having mass layoffs?

#41

Post by nickthegreek »

lapcat wrote: post #17
mabbo wrote: post #8

Amazon, 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 cost of being wrong in the other direction was a worse bet for them to make. Missing out on the growth was unthinkable to them. They would rather just fire thousands of workers than miss those possible profits.

Re: Ask HN: Why are big tech companies having mass layoffs?

#42

Post by jollyllama »

10 years ago, they had access to cheap credit, offices full of people working hard 8 hours or more, solid product portfolios, no visible limits on growth, and foreign competition was weak.

Fast forward to today. Credit is drying up. Devs feel entitled to WFH, and shorter work days (via WFH) and managers are nervous. Their products have regressed, they are actually worse than 10 years ago. Foreign firms like TikTok are now serious competitors.

Perhaps most disturbing to the C-Suite, once they strip away all of the covid #'s, they can tell growth is or will be declining. It's not just about being revenue positive, it's about the derivative. In this situation it's standard procedure to reign in costs and send a message both to investors and the organization that they want the org to become leaner and meaner. They're not just copying each other, all of these companies are in the same position and this is how execs are trained to act in this situation.

Re: Ask HN: Why are big tech companies having mass layoffs?

#43

Post by Dave3of5 »

Because they can.

The signal is out that growth is slowing so they chop people. The culture in the Western world especially in USA is that "layoffs" are necessary. USA is one of the only countries in the world with "At Will" employment. In most other countries these level of layoffs would sink a company easily.

USA is a rather ruthless work environment where workers rights are basically non existent.

Re: Ask HN: Why are big tech companies having mass layoffs?

#44

Post by drums8787 »

vb-8448 wrote: post #22

Does 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.

See above CNBC link.

Re: Ask HN: Why are big tech companies having mass layoffs?

#45

Post by bottlepalm »

Because they all need an excuse to get rid of the bottom 10% every once in awhile. It’s not so obvious that’s the reason when they do it all at once. They all have more than enough cash on hand to keep people on through any downturn.

Don’t blame them. If it were my company I’d do the same thing.

In reality they could cut a lot more and be fine. Elon/Twitter is the extreme example.

Re: Ask HN: Why are big tech companies having mass layoffs?

#46

Post by gsatic »

lapcat wrote: post #17
mabbo wrote: post #8

Amazon, 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 larger companies get, the fewer moves they can actually pull off. There aren't that many options on the buffet table, so it can look like everyone is eating the same thing.

Re: Ask HN: Why are big tech companies having mass layoffs?

#47

Post by neon_electro »

dcolkitt wrote: post #34
Apreche wrote: post #25

Because 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…

There are many class groups that have a potential grievance against capitalism. But pretty sure that FAANG engineers are not one of them.

If they had any class solidarity they would. I guess this is why I have generally never been interested in working for FAANG despite the relevant skill set.

Re: Ask HN: Why are big tech companies having mass layoffs?

#48

Post by jaxn »

mabbo wrote: post #8

Amazon, 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…

It’s not just that they staffed up, but also that it was really hard to hire since everyone was hiring. So salaries went up, and internal recruiting teams expanded to meet the hiring need.

When the hiring slowed, there was not as must work to do hiring and onboarding new employees. This is why so many companies are including “HR” in their layoffs.

The other piece is even if they didn’t over-hire, they over-paid. I believe these mass layoffs are a natural way for salaries to go back down to pre-pandemic-ish levels.

Re: Ask HN: Why are big tech companies having mass layoffs?

#49

Post by basch »

lapcat wrote: post #17
mabbo wrote: post #8

Amazon, 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…

Two words. Record profits.

https://fortune.com/2022/03/31/us-companies-record-profits-2....

Everyone saw an opportunity to make MORE money during the pandemic, and instead of focusing on long term health, focused on quarterly profits. This lead to massive expansion.

The second answer is that these companies have mass layoffs every year. Are these really that abnormal, given the context of their mass hiring's the year before? Facebooks headcount went absolutely bonkers, they are still up over a two year period.

I think saying they were wrong is a mistake. It was more of a hedge on a bet, a bet they could afford to lose, but not afford to miss taking. It was akin to a game of chicken or mutually assured destruction, where if somebody else was expanding, you had to as well, defensively.

Re: Ask HN: Why are big tech companies having mass layoffs?

#50

Post by UncleMeat »

derefr wrote: post #33
DoingIsLearning wrote: post #4

Irrespective 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…

Big public companies need an excuse to fire as many people as they would "naturally" want to fire given 1. just how many people they hire, 2. how often those people turn out to be duds, and 3. how often they pivot strategies internally that no longer necessitate even better-performing people. They can't normally fire as many people as they want to fire, without looking bad / "appearing weak" and therefore losing stoc…

And yet, I'm looking at a team that was affected by layoffs where solid (or even high) performers were fired while also having been in meetings this week to discuss low performers who weren't fired. "Getting rid of duds" is clearly not what is happening, at least at Google.
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