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July 12, 2022, 11:17 a.m. EDT

From Great Resignation to Forced Resignation: Tech companies are shifting to layoffs after a huge ramp up in hiring

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By Jon Swartz

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Like nearly everyone else, cybersecurity startup Aura is closely monitoring costs and bracing for a challenging macro-climate “for years” between inflation, war, supply-chain issues and a post-COVID climate, Aura CEO Hari Ravichandran told MarketWatch. “This is impacting the entirety of the business ecosystem,” he said.

Adding to the economic uncertainty: Demand for PCs and tablets are headed for their worst decline in several years, according to a new forecast from International Data Corp. Global shipments of traditional PCs will fall 8% year-over-year to 321.2 million units in 2022 — the steepest drop since 10% in 2015. Meanwhile, worldwide tablet shipment forecasts were lowered to 158 million, down 6% from 2021 — its worse percentage decline since 10% in 2018.

“We feel very confident that the commercial PC market will remain stronger than the consumer and education markets,” IDC analyst Ryan Reith told MarketWatch. “But it will not match the growth surge during the pandemic in 2020 and 2021. The challenge remains inflation, the war in Ukraine, a lockdown in China, and some lingering supply-chain issues.”

Global cloud sales, meanwhile, are expected to grow at a relatively modest 20% to $494.65 billion in 2022 from $410.9 billion a year ago, according to market researcher Gartner. The forecast is for sales to grow 21% to $599.84 billion in 2023, and 20% to $720.99 billion in 2024.

Another dynamic is the whip-saw-like impact of COVID on job security at companies that greatly benefited from the hyper-growth days of the pandemic, when homebound Americans splurged on streaming, gaming and social media.

After spending the better part of two years ramping up on content and people while it amassed millions of new subscribers, Netflix Inc. /zigman2/quotes/202353025/composite NFLX +0.71% has imposed layoffs in recent weeks. Last month, it internally said it was laying off about 150 employees, including some in the executive ranks and in the animation division, which account for about 1.3% of the company’s 11,300-person workforce. 

Read more: Netflix lays off 150 workers as executives look to cut costs

The jolting circumstances at Netflix and elsewhere represent a jarring turn of events for employees who were jumping from one high-paying gig to another — sometimes, within a matter of months, say jobs experts.

“It was certainly a candidates’ market the last couple of years,” Marty Reaume, chief people officer at Sequoia Consulting Group, told MarketWatch. She said 459 business leaders representing mostly California-based tech companies disclosed in March 2022 that more than 20% of their workforce left their jobs in 2021. The national average, by comparison, is about 15%.

“The curve couldn’t go up forever” of “frenetic hiring” and “rising salaries,” Reaume said. “It was getting a little ridiculous scouring for talent. If there is any benefit to this crazy market, things will settle down a little bit.”

Another consequence is whom will be shed. “Layoffs disproportionately affect women and [Black, Indigenous, and people of color] communities. Companies usually lay off recent hires first, so if diversity and inclusion is new to a company, the new and diverse hires are the first to be laid off,” said Lucinda Duncalfe, CEO and founder of AboveBoard. “Underrepresented members of our society are also hardest hit in the hiring process.” 

/zigman2/quotes/202353025/composite
US : U.S.: Nasdaq
$ 240.74
+1.70 +0.71%
Volume: 13.93M
Oct. 4, 2022 4:00p
P/E Ratio
21.41
Dividend Yield
N/A
Market Cap
$106.30 billion
Rev. per Employee
$2.75M
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