Tech's Job Cuts Give Little Hope for Return to Rapid Growth

(Bloomberg) -- The new year has kicked off for the tech industry with several companies announcing significant job cuts. It’s reminiscent of how 2023 began, which preceded the sharpest industry retraction in more than a decade. 

Amazon.com is cutting hundreds of workers across content-creation units, including Prime Video and live-streaming site Twitch. Unity Software, the maker of technology that underpins popular mobile games like Pokemon Go, said it would reduce its workforce by 25%, eliminating about 1,800 jobs.

Though smaller than the cuts a year ago from Meta Platforms and Salesforce, the moves show the tech industry still isn’t back to the rapid growth it saw for much of the last decade. With higher interest rates, many companies have re-oriented to focus on profit rather than rapid revenue growth.

Amazon’s job cuts are “likely just a move to further streamline costs and improve efficiency to increase earnings” said Poonam Goyal, a Bloomberg Intelligence analyst.

 AI Anxiety in Big Tech

Worker anxiety is particularly acute in creative jobs that may be affected by the proliferation of generative artificial intelligence, which can reduce the amount of labor needed to write or produce video. Duolingo, which makes a widely used mobile language learning app, cut 10% of its contractors such as translators in part due to a greater use of AI. 

Some on Wall Street expect 2024 to bring a wave of mergers after a sleepy 2023 for deal-makers. Historically, large acquisitions have resulted in workforce redundancies. After announcing a $14 billion merger with Juniper Networks, Hewlett Packard Enterprise Company Chief Executive Officer Antonio Neri said Wednesday in an interview with Bloomberg Television that costs could be cut at Juniper through automation.

Tech Job Market Outlook for 2024

Despite signs of gloom, data show the job market is stabilizing. The number of tech employees laid off peaked in the first quarter of 2023 and has steadily decreased since, according to Layoffs.fyi, which tracks job reductions across the industry. The website calculated that 1,186 tech companies eliminated a total of more than 262,600 jobs last year. Eighteen tech companies have let 2,945 workers go since Jan. 1, according to the website.

“I’d say the dust is settling – you’re starting to see companies gear up to say the worst is behind us,” said Bert Bean, chief executive officer of Insight Global, a staffing company. 

Even if workforce cuts have stabilized, many employers remain profit-focused. Bean added that companies remain cautious about hiring and it’s less common for job candidates to receive multiple offers.