Job market Layoffs

Analysis: Layoffs At Big Tech Companies, Brutal As They Are, Have Walked Back Only 8% Of Pandemic Growth 

Illustration of pencil eraser erasing workers

Nearly 200,000 people have been laid off from the U.S.-based tech workforce in the last 14 months.

That number, which comes from The Crunchbase News Layoffs Tracker, is shocking. It’s even more shocking to see large tech companies announce subsequent rounds of mass layoffs mere months after they first cut thousands of employees.

But it’s also worth keeping in perspective: While large tech companies have collectively laid off hundreds of thousands of workers in just over a year, those job cuts follow three years of unbridled hiring during the boom times.

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To get a better sense of how their workforces now compare to just a few years ago, we looked at the biggest culprits when it comes to recent mass job cuts: Amazon, Meta, Alphabet, Microsoft and Salesforce 1. Together, those five companies have laid off 42% of all the tech roles since we began tracking the numbers in 2022.

Even so, the combined layoffs at these companies represent only 8% of the number of new hires they made during the pandemic.

“There is a sense of returning to pre-pandemic levels, but I don’t think it’s necessarily going to be its exact number,” said Hakki Ozdenoren, an economist with Revelio Labs, a workforce analytics company. “The world has changed since then.”

Employment growth by the numbers

Between 2019 and 2022, some companies nearly doubled their employee headcount.

In the span of three years, Amazon, for example, increased its headcount by 93%, according to Securities and Exchange Commission documents.

Meta increased its workforce by 92%, while Alphabet and Microsoft upped theirs by 60% and 53%, respectively. We didn’t include Amazon in the chart below, which only tallies full-time employees, because Amazon counts include both full- and part-time employees.

By these numbers, the hundreds of thousands of employees these five companies laid off aren’t even a drop in the bucket — collectively, they have only laid off 8% of the total roles they hired during the pandemic.

Despite laying off 27,000 employees, Amazon’s cuts only accounted for 3.6% of the company’s new hires. Meta made the largest dent in its hiring spree, slashing half as many of the roles it added between 2019 and 2022  by laying off 21,000 people over the span of four months (between November 2022 and March 2023).

Big tech is targeting managers

When companies overhire, it can create layers upon layers of middle managers to wrangle teams, which in turn creates inefficiencies and slows down projects.

In what Mark Zuckerberg described as “The Year Of Efficiency,” Facebook will flatten its org charts in 2023 and remove several managers from the chain of command.

“Looking from the perspective of 2020-2021, I think the companies were still trying to do what was optimal for them,” said Ozdenoren. “They had money, they faced some demand, and they needed people. I’m not going to go out and say hiring was fully planned out, but it was definitely the optimal strategy.”

During the pandemic, e-commerce and work-from-home technology demand soared, and big companies — flush with cash — experimented with new projects while interest rates were low.

Without hindsight, tech companies were simply operating the way they always had.

Now we’re seeing that the time for experimentation is over, profitability is center stage, and resources are being put back into core businesses. It seems even if Big Tech tries to return to its core operations, and tries to “flatten” its org charts so there are less managers, it will be doing so with far more people than it had three years ago.

“I think, going forward, we are going to see much better workforce planning and a need for better people analytics in tech firms,” Ozdenoren said.

Illustration: Dom Guzman

  1. Salesforce Ventures is an investor in Crunchbase. They have no say in our editorial process. For more, head here.

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