Yahoo Finance Big tech in crisis: the cuts, lay-offs and worried workers at Twitter and Meta
Times are grim in big tech. Projects have been stalled, things are in stasis, and the mood is foul. “It’s awful,” says one worker in London’s Meta offices, who wishes to remain anonymous. “People want to be here because they need the work, but they also don’t want to be here because their colleagues have disappeared — and they know they could be next.” Another says their bosses have been given a number of staff to slash from each team, and workers are trying desperately to one-up each other to save their own skins.
“It’s become cut-throat,” says the Meta worker. “You’re seeing the worst in people.” The reason? Meta’s mass lay-offs, which began late last year, are set to continue. More cuts are expected later this month, with staff undergoing performance reviews to see who should stay. It’s part of what Facebook chief executive Mark Zuckerberg told analysts last month was a “flattening [of] our org structure and removing some layers in middle management to make decisions faster” — business jargon for job cuts.
The picture isn’t much better elsewhere. Another London tech worker the Evening Standard spoke to, who came to the UK from India on a work visa, is spending every waking hour outside of work — alongside some within working hours at Amazon — searching for jobs. He’s been told his job has not been impacted yet, but he is in a consultation period. “I am super busy right now,” he says, “interviewing almost every day”.
The once vibrant tech sector is now deflated, as are the workers who kept its endless momentum going for years. One former Twitter worker, laid off by Elon Musk late last year and who has since found a job outside the tech sector, simply replied with a shrugging emoji when asked for his sentiment.
One of the few places that has come off comparatively scot-free is TikTok — though even there staff are anxious about the increasing drumbeat of negative stories on cyber security and bans on government devices being meted out in the European Union, Canada and the US. So far, the UK has resisted the temptation to follow in other countries’ footsteps. It all adds up to a tough time to be in tech. “There’s kind of a perfect storm happening,” says Nathalie Collins, an adjunct senior lecturer in the school of business and law at Edith Cowan University in Western Australia. Collins has, like many, been tracking the scale and scope of big tech’s big lay-offs.
The bloodletting began late last year, with Twitter leading the charge. Huge numbers of UK-based staff were let go at the behest of new owner Musk when he took over in late October. Twitter was followed by other big names including Meta (the parent company of Facebook, WhatsApp and Instagram), which let go of 11,000 workers worldwide in early November and Amazon, which followed a week later with cuts of 10,000 of its own. In all, around 160,000 people lost their jobs in tech worldwide in 2022, according to Layoffs.fyi, which has been following each agonising turn. But by the end of last month, tech companies had fired 120,000 more. Late last year Musk said he was finished firing staff from Twitter — only to trigger another round last week. The axe dangles over those who remain.
Collins says the mass cuts are the inevitable hangover of Covid. We thought, during the pandemic, that we would be living our lives online forever more. Tech companies engaged in a talent-grabbing war. “There was so much money floating around that the metaverse [Zuckerberg’s multi-billion-dollar folly] could become a reality,” Collins says, as evidence of how frothy the market was.
Because of that frothiness, passion projects could be pursued. “You had Covid, you had low interest rates, and you had these tech-based businesses that were making a lot of money at the same time that their share market price was going up,” says Collins. “They had a lot of money available to them. You had shareholders who were very happy to let people with big dreams, spend a bunch of money on stuff they thought was cool.” That created a global shortage of tech workers as companies hoovered up the talent. “If you wanted a job, all you had to do was code,” Collins says.
That has very rapidly changed. As the economy has slowed, and the perceived importance of tech has returned to a more realistic size in people’s minds, shareholders have got cold feet about the billions being spent on tech firms’ latest toys. Share prices have dropped.
“Typically, once share price is down, the shareholders will start expecting companies to react in a particular way,” says Grace Lordan, associate professor in behavioural science at the London School of Economics. “And that includes cutting costs.”
For Collins, the present situation has plenty of echoes of the dot-com boom — then crash — in the early 2000s. The situation then left many talented workers needing to reskill, which is something that could well happen for London’s tech workers today. However, Collins says we shouldn’t necessarily worry too much about them. “These workers who are being let go are some of the most privileged, educated and well-off people in the workforce,” she says. “Most of them will get jobs.” Collins foresees a problem in the job market, where thanks to the Covid boom in the tech sector, people who wouldn’t ordinarily have bagged a job in the tech sector managed to because of the shortage of talent. They bumped up several pay grades from their previous jobs outside the tech sector, and got used to a different way of life.
“During Covid, when tech companies were booming, people were getting hired at crazy wage rates,” says Lordan. “It was very, very easy to hop from one tech company to the other, and get wages that you wouldn’t have been able to get two or three years ago.”
That’s no longer the case. “Now that there’s a market correction, all the people who are in these fantasy jobs are going back to ‘normal’ jobs,” Collins says. “And people in ‘normal’ jobs are getting pushed out.” Lordan points to research that suggests only around 10 per cent of those laid off from the tech sector have found another job within a month. “There’s probably going to be a cooling-off period, where people’s salary expectations will adjust,” she says.
It all has a wider impact too. While tech workers rarely strayed too far from their offices, thanks to generous perks, they still liked to play hard. And while damage was done during Covid as people pivoted to working from home, an already struggling retail and hospitality sector will likely miss the cash that moneyed tech workers put into their businesses. Not that the tech workers are too focused on that.
“I’m doing everything that I can,” says the Amazon worker, “just to keep my head above water.”
Twitter, Amazon and Meta have all been approached for comment.
