An employee cleans a window at Apple Inc.’s new Canton Road store. in the Tsim Sha Tsui district of Hong Kong, China.
Xaume Olleros | Bloomberg | Getty Images
Many of the biggest tech companies are laying off workers as recession fears grow. However, the job cuts come after several years of rapid expansion.
Microsoft and Amazon are connecting with peers from the technology industry counting on it Alphabet and Target which also reduced the number of employees in recent months.
While every company is a little different, most companies going through layoffs blame macroeconomic conditions and the possibility of a future recession for belt-tightening.
But an underappreciated factor is how quickly tech companies have ramped up hiring over the past two years.
In 2020, widespread Covid lockdowns have made internet applications more important to people and overburdened the business of many tech companies. As sales and profit continued to grow in 2021, they continued to add huge numbers of employees, hoping that the success they had experienced would become a new starting point. It didn’t work that way. Growth is slowing and companies must now adapt.
Apple is the major exception: it hasn’t increased its hiring rate appreciably in the past two years, and it hasn’t announced any layoffs either.
An overview of SEC filings shows how fast the rest of the biggest tech companies grew during the pandemic.
Microsoft it had 221,000 full-time employees at the end of June 2022, the latest official figure available. That was a jump of 40,000 employees from the same period in 2021, an increase of 22 percent. Last year, Microsoft added 18,000 employees, an increase of 11%.
In a note about the Microsoft layoffs, Wedbush analyst Dan Ives said the tech sector had to spend money during the pandemic to keep up with increased demand.
“Redmond needed to hire aggressively along with the rest of the tech sector and spend like ’80s Rock Stars to keep up with immediate demand,” Ives wrote in a note Wednesday.
Amazon it’s more complicated than Microsoft because it has a huge hourly workforce for its warehouses as well as corporate office employees seen in most tech companies.
Still, Amazon grew impatiently, adding 310,000 jobs in 2021. This followed an even bigger expansion in 2020, growing by more than 38% and adding half a million employees.
Overall, Amazon reported 1.6 million employees as of the end of December 2021, of which about 300,000 have corporate jobs.
An Amazon executive said its expansion in the Covid era was one of the reasons for the cuts in a memo to employees on Wednesday.
“During Covid, our first priority was to adapt to the needs of our customers while ensuring the safety of our employees. I am incredibly proud of the work of this team during this period,” Amazon’s head of retail sales, Doug Harrington, said in a statement. obtained by CNBC. “While other companies may have balked at short-term economics, we’ve prioritized investing for customers and employees during this unprecedented time.”
Target (formerly Facebook) has added thousands of employees every year since going public in 2012, according to SEC filings.
In 2020, Meta added over 13,000 employees, a 30% increase and the largest hiring year in company history. In 2021, it added another 13,000 workers. By total headcount, these were the two biggest years of expansion in Facebook’s short history.
Alphabet, previously, Google did not cut as many positions as other large companies, but it has decreased in recent weeks 240 positions at Verilyits Health Sciences Division and released 40 in Intrinsicrobotics division.
But while Alphabet’s recent cuts are much smaller than some other companies, its growth has been similarly massive.
In 2020, Alphabet added more than 21,000 employees, a 15% increase over the year to a total of 156,500 employees. It added over 16,000 employees in 2020, a nearly 14% increase.
However, this growth predates the pandemic, as Alphabet has increased its workforce by at least 10% every year since 2013 and added 20% of new hires in 2018 and 2019.
Apple they grew much more slowly during the pandemic. In fact, Apple’s hiring over the past few years has followed the same general trend since 2016.
As of September 2022, Apple had 164,000 employees, which includes both corporate employees and retail employees for its stores. But this was only an increase of 6.5% compared to the same period in 2021, representing an increase of 10,000 employees in real terms. Apple also hired cautiously in 2020, adding fewer than 7,000 employees in the year leading up to September 2021.