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Pandemic led tech companies into error of judgment; how they’re coping

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Pandemic led tech companies into error of judgment; how they're coping

Image source: Harvard Business Reviews

Pandemic: Microsoft CEO Satya Nadella explained how the pandemic’s arrival shifted the scales in the company’s favor two years ago.

Microsoft prospered as a result of its online services.

“What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry,” said Nadella.

Starting in 2023, the scenario is drastically different from how it was two years before.

Microsoft made the decision to fire 10,000 employees public this week.

The corporation said that as it deals with economic uncertainty, it is reevaluating its digital spending from the pandemic era.

Microsoft users are attempting to do “more with less,” according to Nadella.

The tech space

Microsoft has not been the only business to change course; other businesses have also been laying off employees.

Alphabet, the parent company of Google, has announced its intention to lay off 6% of its workforce (around 12,000 jobs).

Major corporations including Amazon, Google, Meta, and Microsoft have started posting news about letting go of more than 50,000 employees since October.

The decisions run contrary to the pandemic’s early stages, when tech giants were growing to satisfy soaring demand.

Many people in the sector at the time believed the expansion would last for many more years.

However, compared to September 2019, Amazon more than doubled the corporate workforce of the company.

While building new warehouses, they employed over 500,000 people.

Between March 2020 and September of last year, the employment of the massive social media company Meta was doubled.

Other businesses that increased their employee count include:

  • Google
  • Microsoft
  • Salesforce
  • Snap
  • Twitter

In the past several weeks, the aforementioned businesses have also announced layoffs.

Read also: Copyright violations catch up to Midjourney AI as lawsuit looms

Error in judgment

Most tech leaders underestimated the pandemic’s expansion, particularly in light of the number of individuals who returned to their offices and routine.

Consumer spending and advertising have decreased recently due to a number of issues, including:

  • Recessionary fears
  • Inflation
  • Increasing interest rates

In the middle of the crucial December quarter, Wall Street analysts are now forecasting single-digit profit growth for a number of corporations.

Apple and Meta are anticipated to experience declines, according to Refinitiv forecasts.

Recent headcount reductions often refer to a tiny portion of the total workforce.

While they eliminate gains from the prior year for some, they leave tens of thousands (or perhaps hundreds of thousands) of employees for others.

However, it disrupts the lives of employees who are now looking for new employment due to their company’s seemingly endless development.

Pandemic growth

Investment company Third Bridge’s worldwide sector lead, Scott Kessler, offered his thoughts on the tech industry’s recent decisions and early development.

“They went from being on top of the world to having to make some really tough decisions,” said Kessler.

“To see this dramatic reversal of fortunes… it’s not just the magnitude of these moves, but the speed that they’ve played out.”

“You’ve seen companies make the wrong strategic decisions at the wrong times.”

Apple is still the only major player in technology to have not disclosed layoffs.

With the exception of research and development, the corporation apparently placed a hiring freeze.

Apple increased their employment by 20% over the past four years, which is far less than other businesses.

“They’ve taken a more seemingly thoughtful approach to hiring and overall managing the company,” noted Kessler.

Meanwhile, tecg CEOs have admitted that they made a mistake by hiring too many people at the start of the pandemic and by failing to predict the surge in demand when the pandemic’s restrictions were lifted.

Pichai admitted responsibility for Alphabet’s layoffs on Friday and vowed to return the company’s attention to its core activities.

He wrote an email to the staff on Friday, and it ended up on the business website.

“The face that these changes will impact the lives of Googlers weighs heavily on me,” Pichai wrote.

“I take full responsibility for the decisions that led us here.”

Aftermath

None of the CEOs of the large corporations appear to have had their title or compensation changed as a result of the layoffs.

With all the economic warnings, according to Scott Kessler, the tech layoff announcements will probably continue over the forthcoming earnings season.

Companies that haven’t seen such repercussions may soon decide to reduce their workforces in response.

Kessler observed:

“I think there is an element of [some companies], saying ‘We might not see this right now but all these other big companies, these companies that we compete with, that we know, that we respect, are taking these kinds of actions, so maybe we should be thinking and acting accordingly.”

Brandon Foster is a multimedia reporter. He covers a variety of topics.

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