- Salesforce is cutting 10% of its global workforce, equating to around 8,000 jobs which will be lost.
- Amazon is also cutting a much higher number of employees than originally planned, with their figure of 10,000 cuts revised up to 18,000
- Rumors continue to swirl that Google parent company Alphabet will be laying off staff, with an updated performance review structure coming into play.
And the hits just keep coming.
Maybe you thought that with the start of a new year, the damage of 2022 would be behind us. Perhaps you hoped that tech would finally start to turn around, and that your portfolio and the job ads section of San Francisco Craigslist would start to show signs of life.
We’re not saying it definitely won’t happen in 2023, but so far, we’re still stuck in the 2022 storyline.
Because over the last 24 hours, there have been new layoffs announced. And it’s from some big names. Salesforce has announced new reductions in headcount, and Amazon has expanded on its initial layoffs announced in November, adding thousands to the list of staff needing to hand back their keycards.
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Salesforce downsizing by 8,000 employees
Salesforce is taking action to reduce costs and streamline its operations amid economic challenges heading into 2023. As part of this effort, the company will be laying off 10% of its workforce and closing some offices, announced yesterday.
Nice of them to wait until after Christmas, I guess.
This move is expected to result in charges of between $1.4bn and $2.1bn, with approximately $800m to $1bn being recorded in Q4. This will come from severance packages and stock buyouts to a well compensated payroll.
Salesforce believes that these moves are necessary to ensure the long-term success and sustainability of the company after hiring “too many people” during the pandemic.
Their stock price rose 5% on the news, as shareholders were happy to see costs reduced ahead of what is expected to be another challenging year.
The pandemic led many businesses to rely on cloud services, but now that things are starting to return to normal, those same companies are looking to cut expenses. This means job cuts and delays on new projects, which is putting the squeeze on companies like Salesforce and Microsoft.
According to Salesforce co-CEO Marc Benioff, ‘The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions.’ In other words, things are still tough out there, and businesses are being careful with their money.
On top of that, Benioff admitted that Salesforce ‘hired too many people leading into this economic downturn we’re now facing,’ and said that he’s taking responsibility for it.
Amazon cutting over 18,000 jobs in record layoff
Thought the Amazon cuts were over after they announced 10,000 jobs would go late last year? Unfortunately not.
The online retail giant has announced in a company memo that they’ll now be cutting a total of 18,000 jobs, the most in the company’s history. Most of the layoffs will come from the consumer retail division and the HR department.
Amazon has also said it’s scaling back on projects like Echo and delivery robots, which weren’t making money. We might have to wait a while longer for the Amazon drone rollout to hit worldwide then.
CEO Andy Jassy blamed the ‘uncertain economy’ for the cuts, saying Amazon had ‘hired rapidly over several years.’ He added that the announcement had been brought forward because one of the company’s employees leaked the news.
The company has also stopped hiring new staff and halted some of its warehouse expansions, warning that it had over-hired during the pandemic (we’re sensing a theme here).
Amazon started laying off staff as early as November, according to LinkedIn posts by workers who said they had been affected by job cuts.
This move comes as tech firms are feeling the squeeze due to a downturn in advertising revenues and consumers spending less as the cost of living rises.
Amazon employees who will be affected by the cuts will be told by January 18. Analysts expect there could be more job cuts in the months and years ahead as Amazon tries to stay afloat in this tough economy.
More layoffs at Google expected to come
There’s also renewed speculation that Google parent company Alphabet could be looking to reduce their headcount as well.
The rumors are based on the fact that Google is changing its performance review system, with many believing it could spell bad news for some employees.
The new system will make it harder for employees to get high marks and easier for them to receive low ratings. Under the new system, Google believes that 6% employees will fall into a danger zone category, which would put them at higher risk for a performance review. This figure used to be 2%.
At the same time, it will be harder to achieve high marks: Google projects that just 22% of employees will be rated in one of the two highest categories, down from 27% before.
So the idea is thought to be that it will be easier to get rid of underperforming employees, while at the same time keep a lid on big bonuses and pay rises through employee outperformance.
The new system, called Google Reviews and Development (GRAD), has already caused anxiety among employees, who have complained about procedural and technical issues as the year-end deadlines approach.
The anxiety has been exacerbated by a wave of layoffs in the tech industry, leading some employees to wonder if they’ll be next. In a recent all-hands meeting, employees expressed frustration with executives, who have long promised transparency but aren’t providing direct answers to questions about headcount.
Some believe this could see 10,000 ‘Googlers’ shown the door.
What do the tech layoffs mean for investors?
In the short term, layoffs aren’t always considered a bad thing for a company’s stock price. It comes down to the reason behind them. For some companies, the restructuring efforts are seen as a long term positive, which can cause the price to rally.
At other times, layoffs can be a sign that the company is under pressure to remain profitable, which will obviously drag the price down.
What is certain is that picking the winners in a volatile market is really tough. That’s why we created the Emerging Tech Kit, which uses the power of AI to do the heavy lifting for you.
This Kit uses AI to predict the performance over the coming week in four tech verticals. These are tech ETFs, large cap tech stocks, growth tech stocks and crypto via public trusts.
Once these predictions are made for both the verticals and the individual securities within each vertical, our AI automatically rebalances the Kit to align with the predictions. This happens every week, making sure the decisions are always up to date.
If you’re wanting to invest in tech, it makes sense to have tech itself on your side. Right now, there’s nothing more cutting edge than AI.
Worried about volatility?
We can’t blame you, it’s pretty crazy out there. Luckily, AI has you covered here too. Simply add Portfolio Protection and our AI will automatically implement specific hedging strategies to your portfolio, based on its sensitivity to various forms of risk.
This is also updated every week, based on predictions on how impacted your portfolio might be by a range of different factors like interest rates, the oil price and the level of market volatility.
Download Q.ai today for access to AI-powered investment strategies.