Tech Firms: Tech titans throttle hiring amid ‘challenging macro environment’

Tech Firms: Tech titans throttle hiring amid ‘challenging macro environment’

Paris: From e-commerce behemoth Amazon to social networking star Facebook, US tech companies that once grew with devotion have restricted hiring to weather turbulent times.

Internet giants, which have experienced a business boom during the pandemic, have been battered by inflation, war, supply shortages and people returning to pre-Covid lifestyles.

The tightening of corporate belts was a common theme as major tech companies reported earnings from the first three months of this year.

Facebook parent Meta told analysts that hiring targets would be adjusted as it continued to look towards a bright future.

“We regularly reassess our talent pipeline in line with our business needs and are slowing its growth accordingly given the spending projections provided for this revenue period,” a Meta spokesperson told AFP.

“However, we will continue to grow our workforce to ensure we are focused on long-term impact.”

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Seattle-based Amazon, the second-largest employer in the United States, said its ranks are overstaffed after ending last year with more than double the number of workers in 2019.

As the spread of the Omicron variant of Covid-19 slowed in the first quarter of this year and workers returned from off-peak hours, Amazon “quickly went from understaffed to overstaffed,” Chief Financial Officer (CFO) Brian Olsavsky told analysts.

Twitter confirmed that it has suspended hiring altogether and even showed some senior executives the exit as it faces a takeover by Elon Musk, the world’s richest person.

Musk sent mixed messages about his proposed Twitter acquisition on Friday.

In an early morning tweet, Musk said the $44 billion acquisition was “temporarily on hold” pending questions about the social media company’s estimates of the number of fake accounts, or “bots.”

Two hours later, the unpredictable Tesla boss tweeted that he was “still committed to the acquisition.”

“Our industry is in a very challenging macro environment — right now,” Twitter CEO Parag Agrawal said in a tweet on Friday.

“I will not use the deal as an excuse to avoid making important decisions for the health of the company, nor will any Twitter executive.”

At ride-sharing pioneer Uber, chief executive officer (CEO) Dara Khosrowshahi said they “treat hiring as a privilege,” according to an email to employees seen by CNBC.

While big tech players have avoided budget-driven layoffs, that’s not the case with stock trading platform Robinhood or Cameo, an app that sells custom video messages from celebrities.

Robinhood said in April it will cut nearly 350 jobs, about 9 percent of its workforce. Cameo recently terminated the contracts of 80 employees, according to news website The Information.

reasons for the cuts

The reasons for discontinuing curbs, freezes or cuts vary. For example, Meta blamed a change Apple made to the software that runs its popular mobile devices that hinders the collection of user data to target ads more effectively.

Uber, meanwhile, reported that it suffered a big loss in the first three months of the year despite a recovery in its ride-sharing business.

The loss was almost entirely due to revaluations of its stakes in Asia’s Grab and Didi and US-based autonomous driving company Aurora, the earnings report said.

However, a common factor for many internet companies has been that hasty hiring, while demand has surged during the pandemic, has led to staff overweight during lean times.

“Many technology companies have met this demand with remarkable growth in digital services, and as such have been particularly recruiting and growing their businesses over the past two years,” said Terry Kramer, an assistant professor at UCLA Business School.

“A reasonable part of what we’re seeing now, I think, is the normal maturity of technology adoption — where companies can’t/need to keep growing at the same rate.”

Another factor that weighs heavily is inflation, which has pushed up overall costs and tightened consumer budgets.

The US Federal Reserve has steadily increased interest rates this year, making it more expensive for companies to borrow money.

On Wall Street, an S&P 500 index that includes tech-sector stocks is down more than 22 percent year-to-date, and the tech-heavy Nasdaq is down slightly more overall.

Wedbush analyst Daniel Ives advised investors not to fear a repeat of the epic dot-com crash of the late 1990s.

“This is not dot-com bubble 2.0,” Ives said in a note to investors.

“It’s a massive overcorrection in a higher-rate environment that will result in a bifurcated tech band with clear haves and have-nots.”

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