Whether Microsoft, the Facebook group Meta, Amazon or Tesla – almost all companies in Silicon Valley are currently evicting thousands of employees. Industry experts assume that around 50,000 people will lose their jobs in the big tech companies. Almost every day a different company joins the ranks. What sounds like the big crash is more of a small setback, a normalization. That’s what “Capital” editor Hannah Schwär says in the 467th episode of the podcast “important today”. Schwär deals with the tech and start-up scene for the business magazine. She sees several reasons for the mass layoffs.
Tech companies like Meta or Google have long been known for their rapid growth. The corona pandemic also played its part in this, because working from home and other measures increased the need for faster digitization at home as well. Instead of meeting in the office, many conferences could be held via Microsoft Teams, via Zoom or Skype. Instead of going to the cinema, people got used to Netflix, Disney and Co. The digitization push has now abated for the time being, explains journalist Hannah Schwär: “At some point everyone will have a Netflix subscription and every company will have Microsoft Teams. The market is saturated. You can also see that from the fact that share prices have been falling for a long time.” War and inflation are also having an effect, with many people paying more attention to what they spend their money on.
Companies are also noticing the lower demand. Because in the wedding they hired thousands of employees for horrendous salaries, some of whom now have to go again, according to Schwär: “Meta, the Facebook group, has doubled its number of employees to 90,000 since 2019. Now they are laying off around 10,000 to 11,000, that That means the order of magnitude is reasonable.” The situation is similar with the slightly falling sales. Meta, for example, would have lost sales of around four percent, according to Schwär. But the pressure comes from the investors: “If you only knew strong growth rates before, that’s a setback. […] Growth is no longer enough for investors, they want to see profits now.” In addition, companies could use the layoffs to lower the exorbitant salaries again, which also affects the balance sheets.
However, the “damper” is not a sign that digitization is leveling off again at the pre-corona level, says Hannah Schwär. On the contrary: “The need for digitization in the economy is still great.” This is also noticeable in Germany. According to the IT industry association Bitkom, around 140,000 IT positions are vacant in Germany. According to the industry expert, tech specialists are desperately needed: “It’s not always the Microsofts and Googles, but perhaps medium-sized companies who are looking for someone to help them position themselves digitally.”
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