Big tech didn’t assume that the high profits and business received during the COVID pandemic would come to an end—and now it has to make cuts.
- As we previously reported, Meta Platforms, Amazon, Lyft, Stripe, Apple, CNN, Netflix, and Shopify have announced thousands of layoffs in the tech industry, just before the holidays.
- Attempts are being made to find displaced employees new work but hundreds of thousands remain out of work.
- Big tech made major investments and large-scale hiring sprees in 2020 as millions of Americans depended upon technology to get them through the pandemic.
- The world is now returning to normal and these corporations were unprepared for this eventuality, and are now forced to make cuts to accommodate for lower-than-expected revenue.
Why it’s News
Big tech took a risk in ramping up its staff and capabilities during the pandemic when it seemed like it was possible that remote work, home delivery, streaming, and the “New Normal” were permanent features.
Now major CEOs like Meta’s Mark Zuckerberg are apologizing that their data-driven projections aren’t coming to pass.
“That big tech completely missed its COVID surge ending—something that seemed obvious—is astonishing, but it’s more than a simple oversight. These companies understood their lockdown-augmented growth curves might not last forever, but they planned as if they would,” says The Wrap.
“Now comes the fallout. Big expectations telegraphed to Wall Street are getting harder to hit. Workforces rocked by layoffs are experiencing plunging morale. And costs, in many cases, are still too high. Perhaps if the economy were still roaring this would be easier to stomach, but the big bet on COVID-inspired behavior lasting is really starting to hurt.”
Ongoing recession fears, entrenched inflation through 2023, and the potential for increasing unemployment numbers going into the new year put the tech firings and lower revenue projections into a bleak light, as major corporations begin preparing for 12 to 18 months of economic uncertainty.
“One of the tragedies of companies is that a risk that may make sense for a company to take may be catastrophic for its employees,” says Bloomberg Beta’s Roy Bahat.