A growing number of big technology companies are reducing their workforces due to sluggish demand and fears of a recession. Companies, including VMware, Salesforce, and Facebook’s parent company, Meta, have announced layoffs that will affect thousands of workers.
Dell Technologies, the enterprise technology company that makes personal computers, is the latest to announce major layoffs. It said it slashed its global workforce by 5%, or about 6,650 employees, as part of a broader initiative that included limiting external hiring and employee reorganizations. Dell’s move came after sluggish demand for its personal computers for nearly two years, which partly contributed to the company’s 11% drop in revenue in fourth-quarter earnings posted last month.
Despite the harsh climate, tech companies still need to maintain growth and compete with their competitors. This means they can’t ignore market trends or stop investing in new products. Many companies that cut jobs face slow revenue as customers delay purchases or cut back on spending. The decline is also making some tech investors nervous, which could mean more job cuts in the future.
Dell, based in Round Rock, Texas, said its previous cost-cutting measures needed to be revised. A spokesperson told CNBC that the company is also implementing department reorganizations and will reduce its travel expenses. The company expects the changes to improve efficiency.
Other tech companies are also adjusting to the changing economic landscape, with some even announcing layoffs that will affect hundreds of workers. Rideshare company Lyft, for example, plans to cut its workforce by a significant amount and will no longer focus on developing new ideas. It will also pause work on “non-floorcare” products, such as robotic lawnmowers and air purifiers.
The biggest tech companies, such as Microsoft and Amazon, are also adjusting to the changing environment, albeit less radically than some smaller companies. Both have slowed the pace of hiring while focusing on improving existing products and lowering prices. In its most recent earnings call, Microsoft CEO Satya Nadella noted that the company focuses on improving security and other software offerings while continuing to invest in cloud infrastructure.
The number of technology-related layoffs in the US hit a record high in January, according to a report by consulting firm Workplace Analytics. The increase was fueled by concerns that the country is on the verge of a recession and a slowdown in consumer and business spending. The tech sector, which had been a reliable source of employment, has been hit hardest as the economy has slowed. The technology job cuts reflect the slowdown in the broader economy as businesses struggle to sell products and services in a weakening economy. In the past week, companies such as Oracle, iRobot, and Google’s parent company, Alphabet, have cut jobs. iRobot, which specializes in robots that can vacuum floors and clean bathrooms, has halted research and development on its non-floorcare products as it focuses on profitability.
