Brace for more layoffs in 2023, predict business economists

SAN FRANCISCO: Deeper layoffs are coming in 2023 as most business economists have predicted that their companies will cut payrolls in the coming months, media reports said.

According to a report in CNN citing a new survey, only 12 per cent of economists — surveyed by the National Association for Business Economics (NABE) — anticipate employment will increase at their firms over the next three months, “down from 22 per cent this fall”. This is the first time since early days of the Covid pandemic that more business leaders anticipate jobs shrinking at their firms. The findings indicate “widespread concern about entering a recession this year”, according to NABE President Julia Coronado.

With more Big Tech companies like Microsoft and Google joining the ongoing layoff season, about 3,000 tech employees are now being laid off per day on average in January globally, including in India.

According to the survey, a little more than half of the business economists feel the risk of a recession over the next year at 50 per cent or higher, which means more layoffs in the offing in 2023. More than 65,000 employees have been sacked by 166 tech companies to date.

Google’s parent company Alphabet announced to lay off 12,000 employees, or about 6 per cent of its workforce. Microsoft Chairman and CEO Satya Nadella last week said the company will be “making changes that will result in the reduction of our overall workforce by 10,000 jobs through the end of FY23 Q3 (third quarter)”. Amazon earlier announced to lay off 18,000 employees globally, including nearly 1,000 in India. Music streaming giant Spotify on Monday announced to slash 6 per cent of its workforce, or about 600 staffers, globally.

In 2022, over 1,000 companies laid off 154,336 workers, as per the data by layoffs tracking site Layoffs.

Healthtech unicorn lays off 245 staff, second in 5 months

Healthtech unicorn Innovaccer has sacked nearly 245 employees, or about 15 per cent of its workforce, across teams in India and the US, the media reports said on Tuesday.

Innovaccer cofounder and CEO Abhinav Shashank cited an “uncertain macro- economic environment” as the reason behind the job cuts, according to an internal mail sent to employees and accessed by leading startup news portal Inc42.

“Innovaccer has always believed in empowering its customers to accelerate their transformations, leading to higher quality care for patients and popu- lations, improved patient experiences, and better financial and operational performance,” Shashank was quoted as saying in the email.

The startup said it will provide severance packages to affected employees, as well as transitional health insurance benefits and job placement assistance.

This is the second layoff at the company in around 4-5 months’ time amid the deepening funding winter and recession fears.

In September last year, Innovaccer laid off nearly 120 employees, or less than 8 per cent of its workforce, owing to “tough economic conditions”, and most of the layoffs occurred within its tech teams.

Innovaccer had said that its business fundamentals are still strong. However, “given the current economic conditions, we implemented a small workforce reduction to optimise our cost structure”, said the company.

The startup raised $150 mn in its Series E round at a valuation of $3.2 bn in February 2022.

In December 2021, Innovaccer raised $150 million, driven by rapid customer adoption of the Innovaccer Health Cloud.

Cut 20% jobs at Alphabet, key investor tells Pichai

Hedge fund billionaire and investor Sir Christopher Hohn has told Alphabet and Google CEO Sundar Pichai to reduce more jobs and bring the headcount to 150,000, that would require him to slash 20 per cent overpaid jobs in total.

Google’s parent company Alphabet has eliminated 12,000 jobs or 6 per cent of its work- force.

In a letter that has gone viral on social media, Hohn told Pichai that the decision to cut 12,000 jobs is a “step in the right direction”, but it “does not even reverse the very strong headcount growth of 2022”.

“I believe that man- agement should aim to reduce headcount to around 150,000, which is in line with Alphabet’s headcount at the end of 2021. This would require a total headcount reduction in the order of 20 per cent,” wrote Hohn, founder of The Children’s Investment Fund Management (TCI) that holds a $6 billion stake in Alphabet.

The billionaire further said that the management should also take the opportunity to address excessive employee compensation.

“The median salary at Alphabet in 2021 amounted to nearly $300,000, and the average salary is much higher. Competition for talent in the technology industry has fallen significantly allowing Alphabet to materi- ally reduce compensation per employee,” he argued.

In particular, Alphabet should limit stock-based compensation given the depressed share price, Hohn added. Over the last five years, Alphabet more than doubled its headcount.

Cameron Winklevoss’s Crypto exchange Gemini to reduce 10% of workforce

US-based crypto exchange Gemini said that it will lay off 10 per cent of its workforce, citing “bad actors” in the crypto industry, the media reported.

It’s at least the third round of cuts at Gemini in the past eight months. In a message on Slack, Gemini President Cameron Winklevoss informed staff of the latest layoffs, reports The Information.

“It was our hope to avoid reductions after this summer, however, persistent negative macroe- conomic conditions and unprecedented fraud perpetuated by bad actors in our industry have left us with no other choice but to revise our outlook and further reduce headcount,” Winklevoss was quoted.

In July 2022, Gemini laid off more employees in the second round of layoffs.

As per TechCrunch, the company laid off 7 per cent, or 68 employees, in the second round.

Moreover, the exchange is also facing a legal fight with the US Securities and Exchange Commission (SEC) over an alleged unregistered offering and sale of securities in connection with its partnership with the cryptocurrency broker Genesis.

Last week, Genesis filed for Chapter 11 bankruptcy following the meltdown of the FTX exchange. The company listed over 1,00,000 creditors in a “mega” bankruptcy filing, with aggregate liabilities ranging from $1.2 to $11 bn.