Report: Tech Firms Get Back to Basics Amid Rising Layoffs

Big Tech, layoffs, economy

Will 2023 be the year Big Tech companies think less big?

A report Saturday (Jan. 14) by the Wall Street Journal (WSJ) argues that tech firms are taking a more “back-to-basics” strategy following a year in which more than 153,000 workers in that sector lost their jobs.

Many were employees hired by companies who wrongly assumed that the pandemic-era boom would outlive the pandemic, the WSJ said. However, several workers who lost their jobs were longtime staffers working on projects that were outside their companies’ expertise or simply “fiscally irresponsible.”

“Stop doing stupid stuff,” is the advice Redfin CEO Glenn Kelman told the Journal he would give companies if he could go back in time.

His company was among the firms slashing jobs last year. The online real estate seller announced in November it was laying off 13% of its workforce and shutting down its home-flipping service RedFinNow.

“We’ll still need home-services employees for our concierge service to fix up brokerage customers’ listings, but since that group spent most of its time renovating RedfinNow homes, it will get much smaller,” Kelman said in a message to employees.

The layoffs at Redfin — affecting under 900 workers — were small compared to job cuts at companies like Meta, which eliminated at least 11,000 positions last year, and Amazon, which has said it will cut 18,000 jobs in layoffs that began last year and extended into this year.

In the case of Meta, investor worries that the company and CEO Mark Zuckerberg had been too focused on metaverse projects fueled a 64% drop in the price of the company’s shares last year, leading to thousands of layoffs.

Zuckerberg said in December that Meta’s investment in Reality Labs — the division that handles its virtual reality and augmented reality projects — accounts for just 20% of Meta’s portfolio.

While saying that making large investments in the metaverse as the economy turned south was a “mistake,” he also suggested that the overall metaverse push would prove doubters wrong.

Overall, 2022 was a rough year for the tech companies tracked by PYMNTS for our CE 100 Index, as PYMNTS reported earlier this month.

“Inflation ran rampant this past year and the rate hikes pressured businesses and consumers alike, leading to Wall Street worries over spending, profits and slowing top-line growth, and how the great reopening might affect it all,” PYMNTS wrote.

Among them is Milan Parikh, CFO at workplace equity platform Syndio.

“We’ve been a high growth company funded by top tier venture capitalists,” Parikh said, “and [for us] it used to be the growth at all costs right now mentality — now, that’s flipped to more of the basics, which is growth and profitability.”

Meanwhile, PYMNTS’ research shows that CFOs are increasingly embracing embedded B2B solutions as last year’s digital transformation fuels this year’s data-driven growth.

“The AR Transformation Solution: Easing And Accelerating Payments From Business Customers,” showed that organizations which update their accounts receivable (AR) and accounts payable (AP) operations with streamlined and integrated innovations will be more likely to get a stronger hold of cash flow management, cash flow forecasting and management of working capital.