The tech industry has been fueled by a real boom in digitalization since the outbreak of the corona crisis. This boom ended abruptly in 2022. In the USA, where Silicon Valley is important for the sector, more than 50,000 jobs have been cut in the technology sector since the beginning of the year. This is the conclusion reached by the US data analytics company Crunchbase.
Yesterday, Wednesday, Facebook group Meta, which also owns Whatsapp and Instagram, laid off 11,000 employees. Meta follows on Twitter: Previously, new Twitter boss Elon Musk (51) — almost off duty — laid off about half of his 7,500 employees. Musk also laid off 200 employees from the Tesla company.
Hire first, shoot later
The number of employees at Snapchat provider Snap has literally exploded during the corona crisis – from 3500 to 6500. But now the cutback is following – Snap now plans to cut 1200 jobs again, or about a fifth of all jobs. Netflix also had to lay off 480 of its 11,000 employees in September. Software giant Microsoft also announced the layoffs.
Another Silicon Valley giant, Google’s parent company Alphabet, has yet to announce any layoffs. Alphabet CEO Sundar Pichai (50) has already announced that the layoffs cannot be ignored. But when asked by Blick, Google Switzerland said that no information about it was known. Google currently employs 5,000 people in Zurich.
Payments service provider Stripe, ride-hailing service Lyft, exchange platform Robinhood, and fintech firm Better — to name just a few — and many other companies in Silicon Valley have gone out of business.
The economic crisis came faster than expected
So why has the tech industry seen such mass layoffs? The proverb “he who climbs high descends” would be appropriate. During the digitalization boom accelerated by the corona crisis, it was flooded with a huge influx of investors. Technology stocks rose. “This unusually high demand has driven the industry to hire large numbers of employees and grow rapidly,” says Sunnie Groeneveld, 34, a digital specialist at consulting firm Inspire 925.
But now comes the economic downturn. And this came as quite a surprise with the start of the Ukrainian war. Many companies are now forced to save on costs, after growing generously due to the boom. Personnel costs are an important leverage here. “Large tech companies are becoming more cautious and freezing layoffs and hiring,” says Groeneveld.
Investors evaporate
Investors are also pulling back. Because they are afraid of falling dividends. In the last three months, the Nasdaq 100 index, which includes the top 100 technology stocks, has lost about a fifth of its value.
Facebook CEO Mark Zuckerberg (38) admitted that he overestimated the online boom at the start of the pandemic and therefore increased investment. Now the Internet business is back to earlier trends.