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Why are big tech companies cutting so many jobs recently?

Starting in the fall last year tech companies across the board began announcing major cuts to staffing. So, what’s behind the hundreds of thousands of layoffs?

FILE PHOTO: A Google sign is pictured on a Google building in the Manhattan borough of New York City, New York, U.S., October 20, 2020. REUTERS/Carlo Allegri/File Photo
Carlo AllegriREUTERS

The tech industry saw major growth during the pandemic as covid-19 shuttered offices, transforming the way many workers performed their jobs. Remote work, increased shopping online and the rise of cryptocurrencies all aided the expansion of tech companies and their market valuations.

This led to a splurge of hiring for many companies but the economic winds began to change as central banks began to aggressively raise rates to put the brakes on rising prices. With interest rate rises strangling investment, hundreds of thousands being laid off and with more expected to come.

Google is the latest company to fire staff with hundreds more joining the 12,000 let go in January.

“It’s not something that was an easy decision to make, and it definitely isn’t a conversation any of us wanted to have again this year,” Brian Ong, Google’s recruiting vice president said.

“Given the base of hiring that we’ve received the next several quarters, it’s the right thing to do overall.”

Plenty of companies have been letting staff go

Starting last fall, Amazon, Meta and Twitter announced cuts of tens of thousands of employees. Since the belt tightening began the number of tech workers receiving a pink slip has climbed to roughly 234,976, according to Layoffs.fyi, a website that tracks tech job cuts.

Meta, the owner of Facebook, announced in November that it would slash approximately 11,000 roles in the company. The company had taken on 15,000 new hires last year, but chief executive Mark Zuckerberg told Meta employees that he had over extended. “I made the decision to significantly increase our investments,” he told employees, “Unfortunately, this did not play out the way I expected.”

Twitter’s new boss, Elon Musk, came in the front door with the axe swinging, chopping 3,700 from the social media platform’s headcount. After reluctantly following through with his acquisition of company for an inflated value he sought to make the platform, which was losing money and failing to attract significant numbers of new users, more profitable.

Amazon clarified earlier this month that it would reduce staff numbers by 18,000, about 6 percent of its workforce, the largest one-time cull of workers in its history. Like Meta, it went on a hiring spree during the pandemic but “given the uncertain economy” it was necessary to reduce the company’s headcount to prioritize “what matters most to customers and the long-term health of our businesses.”