Most of the companies that thrived during the pandemic today are facing great challenges due to a mixture of factors, which prompted them to lay off tens of thousands of employees in 2022.
Layoff announcements began at the beginning of this year, and they came first from small and medium companies, but now the wave of layoffs has affected technology giants such as “Meta”, “Amazon”, “Uber”, “AirB&B”, “Netflix” and “Microsoft”, to the extent A website, layoffs.fyi, has been established that monitors all the lost jobs, which exceeded 150,000 jobs this year.
Although each company has its own reasons, there are common factors pressuring the sector, the first of which is that many of these companies hired thousands of employees during the pandemic in response to the increasing demand for their services and the hope that the digital lifestyle will last.
For example, “Meta” hired more than 15,000 employees in the first 9 months of the current year, but a few weeks ago, Mark Zuckerberg, the company’s founder, announced that he would lay off 11,000 employees, or 13% of the workforce, and “Amazon” announced the layoffs of 10,000. An employee in the largest layoff in its history.
Scott Kessler, a technical analyst, says that these companies must face reality, as they faced several seasons of declining revenues, and everyone wonders what the company is doing to deal with difficult performance, challenges and disappointing results, but also what it is doing in preparation for 2023, which will be difficult, and many companies Steps were taken to lay off Twitter and Amazon, and the investor community would like companies to be more disciplined and austere.
Another factor is the cost of living crisis and high inflation rates, which in turn led to a decline in online and digital platforms, and some changes in the privacy rules of companies such as Apple hit the market.
In the area of financial services technology, companies have also taken a hit from higher interest rates, and investors have increased pressure on companies to reduce their costs.
Scott Kessler, a technical analyst, explained that many of these companies invested during the pandemic for long-term growth, and did not care about profitability. Financial, because investors will not wait 10 years to see the results of investments, they must make difficult decisions.
Elon Musk, who fired half of Twitter’s employees, is a supporter of the need to cut costs in his new company, which is facing challenges in increasing its profits and adding new users.
Some also believe that the salaries and benefits of employees in the technology sector are unsustainable and higher than in other sectors.
But what about the impact of all this on tech investors? The answer depends on the nature and size of the company. If the layoff is another step on the way to the collapse of the company, which is what smaller companies face, then such news will not restore the confidence of investors, but if the goal is to reduce costs, then this may be welcomed by investors because it may lead to to an improvement in profits.