US tech giants continue with layoffs despite improving economy

WASHINGTON: Google CEO Sundar Pichai apologised for the layoffs the company announced last week and said he "takes full responsibility" for the decisions that led to them.

The tech giant cut 12,000 employees from its global workforce last week, joining the continuing spate of layoffs by tech firms.

Mark Zuckerberg sounded equally contrite last November when Meta fired more than 11,000 employees.

Tech giants IBM and Spotify joined the line this week, taking up the total of tech employees cut this year to 53,000, according to the tally by Crunchbase News; and it's only January. More than 140,000 were let go in 2022, when the tsunami of firings started sending shockwaves around the world.

Buoyed by the massive spike in online usage during lockdowns around the world by governments as the first line of defence against Covid-19, these companies had hired at express speed in massive numbers with the expectation of business remaining unchanged for years.

But as vaccines brought life back to normal, online usage began to shrink and the additional staff hired in expectation of booming business suddenly began to look redundant.

Worse, the US Federal Reserve's aggressive interest rate hikes starting June last year raised fears of a recession that looms over the economy.

"I'm deeply sorry for that," Pichai said in a note announcing the layoffs.

"The fact that these changes will impact the lives of Googlers weighs heavily on me, and I take full responsibility for the decisions that led us here," he said.

He added: "Over the past two years, we've seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today."

Zuckerberg was more specific about the changed reality.

"At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended," he wrote in a note.

"I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected."

They had indeed hired for a different and rosier reality, and massively. Hirings at Meta went up by 60 pr cent over 2020 and 2021, according to The Washington Post, which went on to say that Meta, Salesforce, Microsoft and Alphabet had together raised their workforces by a massive 35 per cent, or 126,170 jobs.

Layoffs started early 2022 but had remained largely unnoticed and unreported because of the numbers, most of them were in the 10s or 100s, according to the Crunchbase News tally. But they did portend the storm around the corner.

Meta set off the storm with 11,000 layoffs in November. That was the big one, and it went on to define and determine the wave of big layoffs that have continued to this day and, experts say, more are coming.

These job cuts come amid growing signs of economic recovery from the crippling impact of the Covid-19 pandemic in the US. Inflation rate has continued to fall and measured 6.5 per cent in December compared to the annualised number 7.1 per cent in November, after it rose to a 40-year high last June.

The American economy grew by a 2.9 per cent annualised rate in the fourth quarter of 2022, according to commerce department data released this Thursday, defying talk of a slowdown and recession; the year-long growth figure was 2.1 per cent.

Yet corporate America is bracing up for recession, and laying off excess staff is a part of it.

President Joe Biden took a swing at them in a speech on Thursday, shortly after the release of data that showed the economy grew by 2.9 per cent in the last quarter, when Meta led the gargantuan job cuts.

"Last summer, plenty of Wall Street analysts were saying that by the end of the year, there'd be a recession," he said.

"They've been telling me since I got elected, 'we're going to be in a recession'. Every time we've gone, we've gotten better... Well, it turns out, thank God, they were wrong."

Biden did not address the question of continuing layoffs in these remarks.

But when asked at a news conference at the White House, his press secretary Jean-Pierre Karine pointed to the indicators of economic growth and the general jobs situation.

There is data out there, she said, that "show that the economy is growing, that show that we are indeed going to a stable and steady -- steady growth, which is important, which is something that the President has worked -- and you've seen this with his economic policy -- has worked towards over the last two years."