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Not just Twitter — Silicon Valley is gearing up for recession with layoffs & hiring freezes

Big tech firms have confirmed hiring pauses, Zuckerberg has hinted at layoffs and small companies have begun cutting down jobs, all citing economic trends, macroeconomic environment.

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New Delhi: Rumours of major layoffs at Twitter have been in the air ever since Elon Musk took over last week, they were confirmed via a memo Thursday. But tech companies have been seeing a downtrend in hiring since the beginning of the year in anticipation of a recession.

In his first memo since the takeover, Elon said that “in an effort to place Twitter on a healthy path”, the company would be reducing its global workforce from Friday.

The beginning of the layoffs coincided with the microblogging site facing issues around the world, where users were unable to access their feed. Outage detection website downdetector.com also reported that there was a spike in complaints from Twitter users.

Tech companies have been laying off employees since the beginning of the year and memos about hiring pauses have been circulated at the larger companies.

“At this stage, it seems more like a realignment of talent and open positions,” Jaideep Kewalramani, Head of Employability Business and COO of learning solutions firm TeamLease Edtech said. 

“Albeit the deep stock price corrections on the back of the rate hikes, the Wall Street analysts are bullish on the long-term prospects of the tech sector.”

Kewalramani also predicted that, although the Indian tech sector will experience a slowdown, this would not be an outright “decline”.

“Indian companies will experience some slowdown, in some areas, but definitely not a decline,” he said. “The tech portfolios will rebalance themselves. Outsourcing will see a brief lull while global clients determine their commitments before picking up again.”


Also Read: Parag Agrawal may be out, but now there’s another Indian helping Elon Musk run Twitter


A global trend

Silicon valley has announced hiring freezes and layoffs across the board.

In June, Meta had warned its employees of “economic trends” that will lead to “leaner” teams in a note from the Chief Product Officer, Chris Cox.

While no layoffs have been confirmed, there have been reports of about 15 per cent of Facebook’s workforce, or about 12,000 employees, being let go.

The rumours began when Meta CEO Mark Zuckerberg reiterated a freeze in hiring and said they will “restructure teams” at a weekly Q&A session at the company.

The second half of June saw 300 employees losing their jobs at Netflix due to a fall in subscriber numbers. They had also cut 150 jobs the month before.

The other tech giants have not hinted at layoffs but have confirmed a slowdown in hiring. Most recently, tech giant Amazon shared a note with its employees about their decision to “balance their hiring and investments” for the next few months.

“With the economy in an uncertain place and in light of how many people we have hired in the last few years, Andy [Andy Jassy, CEO] and S-team decided this week to pause on new incremental hires in our corporate workforce,” Amazon’s Senior Vice-President of People Experience and Technology, Beth Galetti said in the note sent out on 2 November.

One of the main reasons cited was the “macroeconomic environment”, which the company wants to prepare for by keeping a check on its onboarding of staff.

Apple laid off about 100 contract-based recruiters in August. This was a precursor to its announcement last month that it will embrace a hiring slowdown outside of the Research and Development team till next year.

In July this year, Google CEO Sundar Pichai sent a memo to his employees informing them that the company will cut costs and slow its hiring operations for the rest of the year.

“The uncertain global economic outlook has been top of mind. Like all companies, we’re not immune to economic headwinds. Because of the hiring progress achieved so far this year, we’ll be slowing the pace of hiring for the rest of the year, while still supporting our most important opportunities,” Pichai wrote.

A number of other smaller companies have announced job cuts, the latest being rideshare app Lyft and online payment firm Stripe who announced layoffs Thursday.

Cryptocurrency firm Coinbase was hit with layoffs in June this year. CEO of Coinbase Brian Armstrong sent a note to all employees stating that he will be downsizing by almost 18 per cent because of the ongoing economic downturn.

Their chief product officer, Surojit Chatterjee, stepped down Thursday. The decision, he said, was taken to “catch [his] breath”.


Also Read: India must gear up to face US recession. Inflation control comes at cost of growth


‘Anticipated recession’

A common thread in all these messages by the top leadership is the indication of preparing for an impending recession.

“Globally, large tech companies are feeling the heat of the slowdown and preparing for an anticipated recession,” Kewalramani said.

He explained that as a result they have put a stop to new hiring and are not trying to control their regular attrition.

“Furthermore, the scrutiny of non-performers, bench staff, and new initiatives are up. The concept of hoarding talent as a competitive advantage is no longer valid in this economic environment,” he added.

The Twitter lay-off saga

Since Friday morning, several employees tweeted how they were forcefully logged out from all their work databases and communication channels without any prior notice. Laid-off employees have been using the hashtag #LoveWhereYouWorked to document their experience.

Although the immediate nature of the layoffs might have come as a surprise to some, the fact that Musk intended to reduce Twitter’s workforce was not news. As of now, there is no clear number of how many have been laid off.

Laid-off Twitter employees have now opened a forum on messaging platform Signal where they can seek and provide assistance in navigating their conversations with the management. A “lay-off guide” was also released where they spoke about ways in which one could store their data and where to set the bar when it comes to expectations from the company in treating everyone “fairly”.

The layoffs at Twitter began when Musk fired the entire top management team including CEO Parag Agrawal.

(Edited by Theres Sudeep)


Also Read: How RBI’s inflation targeting regime has had a stabilising influence on price rise in India


 

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