A recession is expected to occur in 2022 or 2023, according to several experts, due to historically high inflation and growing economic uncertainty. Financial institutions and analysts are raising the alarm and warning that an economic slump in the US is coming.
Many businesses are getting ready by implementing recession plans, such as hiring freezes and layoffs. And that isn’t exactly good news for employees.
A countless number of tech employees have had to pack their bags recently and leave jobs that seemed to be promising. As per a Crunchbase News tally, over 42,000 US tech employees were laid off this year. Unemployment claims in the American economy are at an eight-year high.
Companies like Netflix, Tesla, Coinbase, and Robinhood announced major layoffs this year. The reasons behind this ranged from the COVID-19 pandemic and overhiring during difficult times to the unpredictable crypto market and rising inflation. Geopolitical issues also have a role to play.
Early-stage startups are also feeling the pressure. With a speculated impending recession, startups are having difficulty raising funding and, as a result, are compelled to say goodbye to employees.
Let’s now look at some of the top tech companies that announced layoffs this year.
Tech Companies That Have Hiring Freezes This Year
Even though there hasn’t been a recession yet, there is no denying that speculation about when one would occur has intensified. Following a strong year of the economic boom in which Americans made large purchases and had plenty of jobs for everyone, businesses appear to be pinching their budgets and laying off their employees.
Once the pandemic-fueled 2020 and 2021 (which were positive years for the tech industry) cooled down, the wider economy got hit by too many factors simultaneously, such as the impending recession, Russian aggression against Ukraine, and high inflation.
In this kind of unpredictable corporate and business environment, employees and job applicants need to be well prepared to be aware of the conditions of different tech companies. Job security is becoming a concern for many Americans as different companies are thinking of imposing their recession plans. Let’s dive in.
1. Netflix
Netflix, the popular video streaming platform, was an invincible growth machine for the last few years. But that was before a gazillion other OTT platforms got introduced to the scene. The number of Netflix subscribers dipped, and the company took a major financial hit. Consequently, the company had to lay off 150 employees in May. Additionally, it announced another set of cutoffs in June that impacted 300 employees.
Several creative professionals like Sebastian Gibbs bid adieu. Now, Netflix is reportedly considering adding advertising to its service in an attempt to halt the loss of its subscribers. Let’s see how that one works out.
2. Twitter
It has been a rocky year for Twitter. With Elon Musk’s takeover, the company faced internal turmoil, which impacted its advertising revenue. It is reported that Twitter laid off 30% of its employees. Apart from legal affairs with Musk, the company also had difficulty meeting audience and revenue growth goals.
Consequently, Parag Agrawal, the CEO of Twitter, declared a hiring freeze in a memo this year. Twitter has halted the hiring process in the majority of the divisions. With new acquisition deals, the company is expected to witness further changes.
3.Coinbase
Coinbase, a cryptocurrency platform, laid off 18% of its workforce, that is 1,100 workers, this year. The company says it announced the layoff to control operating costs in the face of the current market conditions. CEO Brian Armstrong mentioned the impending recession and the cryptocurrency collapse as being responsible for this unfortunate situation. This is called a “crypto winter.”
Coinbase emerged as the first significant crypto organization last year and overhired employees. But the business can no longer sustain the expenses of having an overstaffed workforce, given the current revenue shortfalls. The company grew too quickly, and now it cannot bear the costs anymore.
4. Robinhood
Brokerage firm Robinhood laid off nearly 9% of its workforce earlier this year. To our surprise, it cut off an even bigger percentage, 23%, to be precise, of its employees on August 2. This marked the company’s second layoff in just four months.
CEO and founder Vlad Tenev announced they experienced a “hyper-growth” in the last two years. The company then laid off “duplicate roles and job functions.” Together, both layoffs resulted in over 1,000 employees losing their jobs.
5. Meta
Formerly known as Facebook, Meta Platforms is experiencing its biggest hiring freeze ever. Apart from layoffs, the corporation is also expecting budget cuts. Due to sluggish revenue growth and rising inflation worries, Meta aims to cut back on recruiting. The company aims to halt or curtail hiring for most mid and senior-level positions.
In a company-wide Q&A, CEO Mark Zuckerberg asked to anticipate smaller staff at the corporation next year. Zuckerberg holds the war in Ukraine responsible for the downturn and says that some of the employees at the company aren’t a good fit, and the aggressive approach is supposed to test such employees.
6. Uber
Uber is the latest tech firm that has announced a hiring freeze. As a response to a “seismic shift” in investor sentiment, the company has decided to halt hiring and cut back costs in the meantime. CEO Dara Khosrowshahi said the same in an email sent to the employees.
Uber aims to become a leaner firm and, consequently, has cut back funding on marketing and incentives. The CEO has asked to treat recruitment as a “privilege” now. Uber shut its doors in Vilnius, Lithuania, back in September.
7. Microsoft
Microsoft may not have laid off employees in large numbers like some other tech companies, but it is still attempting to slim down its workforce in response to the current economic volatility. In May of this year, the company said that it was being more careful with hiring in the Office and Windows divisions.
Microsoft isn’t presently facing a company-wide hiring freeze, but certain departments are experiencing a slowdown in recruitment. Microsoft removed several job postings in its security business and cloud units in July. The company aims just to hire the right people for the right role.
8. Bolt
The payments provider Bolt is another tech company that joined the bandwagon and cut off employees this year. CEO Maju Kuruvilla announced that the company is facing “structural adjustments,” and as a result, more than 100 employees were laid off. This was done to secure the company’s financial position. Kuruvilla confirmed the same in a blog post but did not fully disclose how many people were exactly affected or what positions in the company took the most hit.
The changing market conditions compelled Bolt to make such a decision. It was later reported in May that the number of employees who were laid off could be around 185.
9. TikTok
TikTok emerged as one of the biggest social media platforms during the pandemic when Millenials and Gen Z hopped on trends and popularized the app. That doesn’t mean that the platform is completely immune to layoffs. Because according to reports, TikTok started laying off employees in July due to their “global restructuring plan.”
There is allegedly a “company-wide restructure” going on at TikTok, and this led to the US employees losing their jobs, and the same fate could await the EU and UK offices. There is no confirmation regarding how many TikTok workers have lost their jobs yet. However, there’s speculation that the number could be close to 100.
Final Thoughts
2022 has been a challenging year for the tech industry. While the field flourished in the last two years owing to the pandemic’s peak, the same cannot be said about this year. Big and small tech companies alike are experiencing hiring freezes and announcing employee cutoffs one after the other. It’s wise to be informed about such company situations, especially if you are planning to apply.
