NEW YORK - Snap said on Feb 5 it would cut around 528 employees, or 10 per cent of its global workforce, a sign that the spate of tech layoffs seen in 2023 could persist as firms grapple with economic uncertainty.
The company joins other tech and media firms such as Amazon and Alphabet that announced layoffs in January. Remote workers seem to be hit the hardest by Snap’s cut, said a person familiar with the matter, as the company has been pushing employees to come back to the office for four days a week since a year ago.
Overall, almost 32,000 workers have been let go from 122 tech companies since the start of the year, according to tracking website Layoffs.fyi.
The tech sector shed 168,032 jobs in 2023 and accounted for the highest number of layoffs across industries, according to a report by Challenger, Gray and Christmas in January. That included more than 10,000 cuts at Microsoft.
In 2024, “tech companies are still trying to correct for their over-hiring during the pandemic surge, given that the high interest-rate environment and tech downturn have both lasted longer than initially expected,” Layoffs.fyi founder Roger Lee wrote in an e-mail.
There have been two main waves of job cuts in recent years, according to Mr Lee. The “early Covid-19” spike, from the first to second quarters of 2020, and the “interest rate hike” effect, which has been going on since the second quarter of 2022. “This year’s layoffs are typically smaller and more targeted than the layoffs a year ago,” Mr Lee said.
Although economic factors are the main reason for tech layoffs, Mr Lee noted that many companies are citing the race for artificial intelligence (AI) as a factor, as they are shifting resources to focus on AI talent. According to an analysis by CompTIA, which tracks employment trends in the tech industry, job postings in “artificial intelligence or requiring AI skill increased by about 2,000 from December to January, to 17,479”.
So even as the industry sheds some jobs, it is also hiring aggressively in others. There were 33,727 active job postings in January, according to CompTIA, the largest month-over-month increase in 12 months.
Staffing company Insight Global’s chief executive Bert Bean said: “I do feel like most of the layoffs have happened, and companies are going to start to rebound. But it’s still very uncertain.”
He expects the market to remain that way for about the next two quarters, “until the Fed really comes out and starts to cut interest rates”.
Snap, which owns photo messaging app Snapchat, has long struggled to turn its popularity with young users into consistent revenue growth and compete with larger rivals like Facebook-owner Meta Platforms, which issued its first dividend on Feb 1 after laying off staff in 2023.
Snap will report fourth quarter results on Feb 6.
Ms Jasmine Enberg, principal analyst at research firm Insider Intelligence, said: “The layoffs don’t bode well for the state of Snap’s business. Snap is likely trying to garner some goodwill with investors, who rewarded its competitor for its cost-cutting measures.” BLOOMBERG, REUTERS
