Free Ubers, gourmet lunches and private pods reserved for napping. “This is a day in the life of someone working in tech,” says a Gen Z worker as she shows her TikTok viewers around her office. “We also have a barista at the office... and a dangerous amount of snacks,” she says.
Employees at companies such as Apple, LinkedIn, Microsoft and Meta have long enjoyed a raft of luxury benefits designed to retain talent. But with the threat of mass layoffs, there are fears this cosy culture will soon come to an end.
“Winter is coming to the tech world and Silicon Valley is seeing layoffs across the board for the first time since 2008,” says Dan Ives, a Wall Street technology analyst at Wedbush Securities.
Recent financial results revealed just how deep the trouble runs. Meta’s shares fell 24 per cent after a dismal set of numbers. Mark Zuckerberg said revenues had declined 4 per cent, but costs jumped 19 per cent. Meta’s valuation is now languishing at about $265bn, having been a trillion-dollar company just months ago.
Meanwhile, Amazon projected the slowest holiday-quarter growth in its history. Quarterly revenues grew by 15 per cent compared with the same period last year to $127.1bn. Net income declined by 9 per cent to $2.9bn. “We’re taking actions to tighten our belt,” chief financial officer Brian Olsavsky said.
Google parent Alphabet said its advertising revenue grew just 6 per cent, which, apart from at the start of the pandemic, was its weakest revenue growth for any quarter since 2014.
Reality is starting to bite. The prospect of job cuts has plenty of Silicon Valley staff nervously awaiting their company all-hands meeting or Zoom call during which their team’s Slack channel is locked and corporate email accounts frozen. Benefits are being cut, and hours worked are increasing. Data gathered by Layoffs.fyi estimates there have been 60,000 tech redundancies in the US so far this year.
Nowhere are fears of redundancies more pronounced than at Twitter. Ahead of closing his $44bn takeover of Twitter, Elon Musk was reported to be considering a huge cost-cutting drive of as much as 75 per cent of the company’s headcount. Staff circulated an open letter, calling Musk’s potential cuts “reckless” and demanding Twitter continue to protect their benefits such as remote working. “We demand to be treated with dignity, and not treated as mere pawns in a game played by billionaires,” Twitter staff wrote.
In a letter to Zuckerberg, Brad Gerstner, chief executive of Altimeter Capital, which owns a $340m stake in Meta, urged it to cut costs and staff numbers. “It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” he wrote.
Some big tech companies, however, are recruiting aggressively. Google’s headcount grew from 1,50,028 last year to 1,86,779. Sundar Pichai, the chief executive, said it planned to slow hiring for the rest of the year. Google has, however, cut back on travel, enforcing a “business critical” only rule — no more socials or team offsites.
Meanwhile, Microsoft recently laid off 1,000 staff, out of a total headcount of 2,20,000, and Snapchat laid off 20 per cent of its 6,400 employees due to a slowdown in advertising technology.
It is not just listed big tech companies. Private, venture capital-backed start-ups are being forced to rapidly adjust to the new economic outlook. In May, start-up incubator YCombinator, whose alumni include companies such as digital bank Monzo and Airbnb, wrote to founders: “The safe move is to plan for the worst.” It advised cutting costs so companies had 30 months of cash on hand to survive a long recession.
Elsewhere, streaming company Dazn has cut engineering jobs in London. In Europe, German food delivery company Gorillas has made 300 people redundant. And Klarna, the buy-now, pay-later company, reduced headcount by 10 per cent after its valuation fell from $46bn to $6.7bn.
Steve Sarracino, founder of venture capital firm Activant Capital, says big tech companies face a reckoning. “They haven’t done [job cuts] for so long,” he says. “Remember, we’ve had a 12-year run. There’s a lot of pushback on any type of cuts.”
The Sunday Telegraph
