What's behind the recent large-scale layoffs at big tech companies?

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In the space of just one week, it seems that the heads of the world's big tech companies - especially in the US - have agreed to make layoffs and freeze hiring across their workforces. While Elon Musk's move could be seen as ruthless as he is the new owner of Twitter, others such as Zuckerberg and Bezos have made similar decisions despite leading their companies for much longer.

The layoffs at Twitter do not seem to be over, as thousands of temporary and outsourced workers have had their contracts terminated in recent days. For its part, Meta reduced the size of its workforce by approximately 13%, equivalent to 11,000 fewer employees, in a decision that Mark Zuckerberg described as one of the most difficult ones in his life. Just a few hours ago, Amazon announced its intentions to lay off some 10,000 workers, making it the largest workforce reduction in its history after a hiring freeze that took place a fortnight ago.

While these are the most high-profile cases, other companies such as Salesforce, which focuses on software-as-a-service, marketing and artificial intelligence, have also confirmed hundreds of layoffs over the past week. The company currently has a workforce of around 70,000 employees and has claimed that the decision has affected less than 1,000, although other sources indicate a figure of around 2,500 dismissals.

Why are these layoffs taking place?
Although it seems clear that the current global economic instability does not help to expand the workforce and generate new contracts, each large technology company that has carried out these reductions has given its own reasons -generally they were related to economic and productive concerns.

Twitter was the least camouflaged in its discourse and blamed the layoffs on a change in the social network's senior management. The reality is that between Twitter, Meta and Amazon, there have been losses of more than 300 billion in 2022, accompanied by large falls in the stock market. In fact, beyond the general economic situation, Amazon has experienced the slowest growth rate in its history. Despite this, the top executives of each of the technology companies are optimistic: "Despite the drop in revenue, we think the downturn has made the valuation of our work very attractive because of its position in the sector and it may be interesting for investors in the long term", Zuckerberg assured in his latest statements.

Thus, the changes undergone by the workforces of the different companies are as follows:

Amazon: downsizes its workforce of approximately 1.5 million by 10,000 employees.
Meta: downsizes its workforce of approximately 87,000 by 11,000 employees.
Twitter: downsizes its workforce of 7,500 by 3,000 employees.

This is a translation of the original article published in Spanish by Carlos Soria.