Facebook (formerly known as Meta) lay off 11,000 employees in November. This week, fresh job losses of 10,000 were announced. Strangely, Meta has designated this year as the “Year of Efficiency” for them. Does Mark Zuckerberg’s assertion that Meta’s newest transformation is intended to make it a better technology firm imply that more of these tech titans will utilize technology to eliminate human need?
These layoffs have occurred at the same time as each of these big titans has announced multibillion-dollar investments in emerging technologies, particularly AI. It is clear to question if these computer titans, despite their massive financial resources and bright employees, grasp the fundamentals of talent acquisition and company management. Or is it a paradigm of hire-use-throw-away?
Exists a tech downturn? Not at all Exists a value bubble in the IT sector? Yeah, somewhat. Are these huge IT companies bankrupt? Not at all; they have an enormous surplus of cash. Moreover, they are announcing layoffs because other corporations are doing the same.
Yet, the end of the age of easy money and the beginning of a cycle of stricter monetary policy suggest a shift in corporate morale. In the United States, where the FAANG platforms are mostly located, tech businesses account for barely 2% of all jobs, compared to larger industries that are still recruiting. Hence, layoffs in the technology sector cannot yet be seen as a sign of economic slowdown in the United States.
The acronym FAANG stands for Facebook, Amazon, Apple, Netflix, and Google (now Alphabet). Now, one wonders if these stocks, with their newly-announced intention to operate efficiently, will be deemed Manaa (Hindi for “prohibited”).
During the COVID-19 pandemic, the global increase in digital usage helped the technology industry. As more jobs became remote, more people spent longer periods of time online. Hence, social media utilization and e-commerce adoption increased. With this exponential expansion, IT businesses (including the smaller ones) embarked on a hiring binge with high wages virtually immediately.
In addition to increasing revenues, the idea of a “new normal” was included into the business planning assumptions of IT companies. This was an error, particularly now that the hypergrowth has slowed.
With the rising commercialization of Artificial Intelligence (AI) capabilities, these technology companies are experiencing an existential crisis at midlife. These business models necessitate a novel enterprise vigor and organizational culture, including the recruitment of suitable personnel and the creation of new monetizable goods. This is why layoffs are helpful.
In the preceding several months, about a quarter of the jobs eliminated in the technology sector were in human resources. First, it suggests that corporations may do fewer hiring in the near future. Second, and most importantly, commercially available AI-based HR solutions automate duties associated with the whole hiring process, onboarding personnel, including background checks and HR compliances, and even performance monitoring.
What are the ramifications for human ability? The hiring-firing-hiring cycle is anticipated to continue over the next few years in the technological skills role. With growing technology and a shifting legal environment (particularly regarding data and consumer protection), these tech employers will require fresh talents, rendering existing tech skills obsolete.
The greater concern is that huge, publicly traded firms will continue to face concerns from stakeholders over profitability. Simply expressed, this is the objective of for-profit organizations. To generate a profit for its stockholders. Even while some computer companies are experiencing a sales slowdown, they remain huge and lucrative. Hence, reducing the staff and claiming increased efficiency and profitability inspires trust among their shareholders. This is essential since share price is also a performance-reward indicator for CXO remuneration.
In an industry that is frequently disrupted by developing technologies, layoffs will be a regular occurrence. This is because tech companies must maintain their competitiveness and profitability in order to survive. So, the entities prefer to disrupt their organizational structures before they are disrupted. Regarding the fight for talent, it never ends in the technology sector. This is not just the proper size, but also the perfect stock of skill.