Underground waves in high-tech industry
Last year, the technology industry was very active at this time. Employees of large companies are allowed to work remotely with good pay and many benefits. Now things are not what they used to be, with many cutbacks or hiring freezes, even accounting for layoffs.
people in business A recession will hit the tech sector, economists say, and the question now is how big the impact will be.
Many big tech companies are struggling. Graphic design: people in business
Keith Hwang, CEO of technology hedge fund Selcouth Capital Management said: “I think technology companies are having a tough time. An undercurrent appeared, but no one fully understood how bad it was. In the short term, they try to control costs. to minimize costs.
According to analysts, companies that offer information technology products will suffer the most. With market volatility, advertising budgets are often the first to be cut. This poses a potential risk to Meta, Google, and the many companies that depend on online advertising revenue.
John Lovelock, an analyst at Gartner, said that all computer and technology makers except Apple would be at risk if inflation hurts consumer spending. He believes 2022 will be a bad year for companies that make hardware for mobile phones, PCs, laptops, etc. Tech companies that thrive during the pandemic are most at risk. As businesses grow, operating costs skyrocket, and when pockets are empty, they must adapt to survive.
One of the first manifestations of the crisis was a wave of unconscious layoffs. In early October, multiple insiders reported that Meta was attempting to lay off thousands of employees. Many internships have been cancelled. Managers were asked to identify the 15% of the organization’s employees who “need support because of poor performance”. These people would then be fired for inefficiency. That’s typical of Amazon, but when times get tough, many other tech companies follow suit.
Late August, according to sources edge, Snap will lay off 20% of its workforce, or 1,000 employees, due to disappointing business results. Giants like Microsoft, Alphabet and Meta have blocked the hiring in a big way. Famous Silicon Valley perks like free lunches, snacks, and snacks for employees have also been removed. In September, Google plans to cut employee travel budgets.
Some companies are also adjusting setup costs, as many employees say they have no intention of returning to the office after the pandemic. However, cutting causes many “side effects”. Facebook employees in the San Francisco Bay Area were injured as cleaners protested layoffs and cost cuts.
Tech companies are also concerned, cutting projects that don’t generate immediate revenue. Amazon shuts down Amazon Care, downsizes its robotics team, and launches the Grand Challenge Lab. In a message to employees last week, Amazon management sent a clear message: “Save twice”. Meanwhile, Google has halved projects in its Zone 120 incubator, and Facebook has also postponed several new product projects.
According to experts, the health of the entire tech industry will become clearer by the end of October, when Meta, Alphabet, Amazon, Apple, Microsoft, Netflix and many others will report their Q3 2022 financial reports.
Kyong Nha (Track people in business)