Fear of further deterioration in the economy is rattling Big Tech. For the past couple of months, all of them have frozen or minimized new hires, many have tackled layoffs, and some of them have recently started announcing other cost-cutting policies like getting rid of underutilized facilities or limiting employee travel, while insisting (or threatening) their workers to be more productive.
When the river sounds… This is especially striking in companies with multimillion-dollar profits and, until very recently, spending huge amounts of money on new projects, hiring thousands of workers or buying other companies for exorbitant sums. But the bad course of the world economy and skyrocketing inflation have curbed so much euphoria and have made all of them go almost overnight from waste to savings.
In fact, several of those responsible for these big technology companies have been warning in recent months that, despite the current poor state of the economy, the worst is yet to come. Mark Zuckerberg assured his employees that the worst recession in recent history is coming, Elon Musk warned that a recession is inevitable, Bill Gates said that the world will experience an economic slowdown in the near future, and Sundar Pichai told his employees that Google is faces great uncertainty.
Less travel and meetings. Panic, therefore, has spread among technology companies, which for a few months have been carrying out various spending containment policies. The last to announce a measure of this type has been Microsoft, which has informed its workers that they will reduce the budget for business trips and company meetings, according to the Wall Street Journal. In May, Salesforce also announced that it was limiting its corporate travel.
The New York newspaper even points out that some bosses have recently been paying for their subordinates’ meals and drinks when they have decided to meet with them for some kind of professional meeting away from the offices, expenses that were previously covered by the company. It should be remembered that just two months ago Microsoft blew up the tech market by buying Activision Blizzard for more than 60,000 million euros.
Optimize resources. At Amazon, cost containment takes a different turn. Those of Jeff Bezos, unlike the vast majority of technology companies, have not carried out massive layoffs, at least for now and as far as is known, but have chosen not to renew many of their temporary workers, most of them young of warehouse, to thus adjust its budget to the contraction of the economy.
Also, the e-commerce giant is looking to clear some 3,000 square kilometers of storage space that it has underused. During the pandemic, the increase in Amazon’s activity led its leaders to rent new warehouses to be able to cope with the peak in demand, infrastructures that they do not need now. That euphoria also led them to hire more employees than they need under normal circumstances, which is why they are not going to renew many of them.
layoffs everywhere. Although the biggest cut in all technology companies has occurred in human resources. All, without exception, have announced that they are stopping the arrival of new employees and that they will only cover those vacant positions that are essential for the business. At the same time, many technology companies have announced layoffs or have threatened their workers with layoffs if they do not perform as expected, now, of them.
Produce more with the same. Precisely productivity has also been one of the elements that some of the leaders of these companies have brought up in relation to cutting costs. Faced with the foreseeable reduction in income and the hiring freeze, both Sundar Pichai, CEO of Alphabet, and Marck Zuckerberg, CEO of Meta, have communicated to their employees that they have detected that they could be more productive and that they should strive to be. It’s remarkable that performance issues are discovered just when they most need to squeeze their employees.
The founder of Facebook, in addition, has not limited himself to pointing out the problem of productivity, he has also threatened, albeit in a veiled way, to fire those who do not reach the company’s new performance objectives. Zuckerberg assured that those people who fail to achieve these new and more demanding goals “probably should not be here.”
Image | Israël Andrade
