Tech titans hold back hiring amid ‘challenging macro environment’

Paris: From e-commerce colossus Amazon to social media star Facebook, America’s tech companies that once grew with abandon have held back hiring to endure tumultuous times.

Internet giants that experienced a business boom during the pandemic have been hit by inflation, war, supply issues and people returning to pre-Covid lifestyles.

Corporate belt-tightening was a common theme, with big tech companies reporting profits in the first three months of this year.

Facebook parent Meta told analysts hiring targets were being adjusted as it continued to look to a bright future.

“We regularly reassess our talent pool based on our business needs, and in light of the spending guidance given for this earnings period, we are slowing its growth accordingly,” a Meta spokesperson told AFP. .

“However, we will continue to grow our workforce to ensure we are focused on long-term impact.”

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Seattle-based Amazon, the United States’ second largest employer, revealed its ranks were too plump after finishing last year with more than twice as many workers as in 2019.

As the spread of the Omicron variant of Covid-19 slowed in the first quarter of this year and workers returned from furlough, Amazon “quickly went from understaffed to overstaffed,” a chief financial officer (CFO) Brian Olsavsky told analysts.

Twitter confirmed it had categorically suspended hiring, and even showed a few senior executives the exit, as it faces a takeover by Elon Musk, the richest person on the planet.

Musk sent mixed messages on Friday about his proposed acquisition of Twitter.

In an early morning tweet, Musk said the $44 billion takeover was “temporarily on hold,” pending questions about the social media company’s estimates of the number of fake accounts or “bots.”

Two hours later, the unpredictable Tesla CEO tweeted that he was “still committed to the acquisition.”

“Our industry is in a very challenging macroeconomic environment – right now,” Twitter chief executive Parag Agrawal said in a tweet on Friday.

“I won’t use the deal as an excuse to avoid making decisions that are important to the health of the business, nor will any Twitter executive.”

At ride-sharing pioneer Uber, Chief Executive Officer (CEO) Dara Khosrowshahi said they would “treat hiring as a privilege,” according to an email to employees seen by CNBC.

While big tech players have avoided budget-driven layoffs, that’s not the case for stock trading platform Robinhood or Cameo, an app that sells personalized video messages from celebrities.

Robinhood said in April it would cut nearly 350 positions, or about 9% of its workforce. Cameo recently terminated the contracts of 80 employees, according to news site The Information.

The reasons for the cuts

The reasons for hiring restrictions, freezes or reductions vary. Meta, for example, blamed a change Apple made to the software running its popular mobile devices that hinders the collection of user data to target ads more effectively.

Uber, meanwhile, said it suffered a big loss in the first three months of the year, despite a rebound in its ride-sharing business.

The loss was due almost entirely to the revaluation of its stakes in Asia’s Grab and Didi and U.S. self-driving company Aurora, according to the earnings report.

A common factor for many internet companies, however, was that rapid hiring as demand surged during the pandemic resulted in overweight staffing in lean times.

“Many tech companies have responded to this demand with notable growth in digital services, and as such have recruited and grown their business especially in the past two years,” said Terry Kramer, assistant professor at the School of UCLA trade.

“I think a reasonable part of what we’re seeing right now is the normal maturity of technology adoption – where companies can’t/need to keep growing at the same rate.”

Another factor weighing heavily is inflation, which has driven up overall costs and squeezed consumer budgets.

The US central bank has been steadily raising interest rates this year, making it more expensive for businesses to borrow money.

On Wall Street, an S&P 500 index of tech stocks has fallen more than 22% year-to-date, and the tech-heavy Nasdaq is down a little more overall.

Wedbush analyst Daniel Ives advised investors not to fear a repeat of the epic Dot-com crash of the late 1990s.

“This is not an Internet 2.0 bubble,” Ives said in a note to investors.

“It’s massive overcorrection in a higher rate environment that will cause a bifurcated tech band, with clear haves and have-nots.”

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