Tech firms brace for tough times; Stripe, Lyft to cut jobs while Amazon freezes hiring

Amazon said it would pause adding new corporate workers, citing an “uncertain” economy and its hiring boom in recent years. PHOTO: AFP

LONDON – Technology companies are once again tapping the brakes on hiring as they contend with sluggish consumer spending, higher interest rates and the impact of a strong US dollar overseas.

Amazon.com said on Thursday that it will pause adding new corporate workers, citing an “uncertain” economy and its hiring boom in recent years.

Ride-hailing company Lyft is going further – it will eliminate off 13 per cent of staff, or around 683 people.

Twitter’s cutbacks are under particular scrutiny as new owner Elon Musk shakes up the social networking business and pares roughly half its jobs.

Technology companies made moves earlier this year to rein in costs, with many of the industry’s biggest firms freezing hiring or cutting some departments.

Even Apple, which has outperformed most of its peers this year, is slowing spending and has paused much of its hiring.

But some tech giants are finding that they now need to take more dramatic steps to trim their expenses.

Outplacement firm Challenger, Gray & Christmas said on Thursday that job cut announcements were up 48 per cent year on year in October, with more layoffs “on the way”.

A federal jobs report on Friday will give a clearer picture of hiring trends in the United States. Even with the austerity, economists expect a net gain of 200,000 for non-farm payrolls.

Here are some of the latest companies to tighten their belts.

Amazon

The e-commerce titan halted “new incremental” hiring across its corporate workforce – a decision that chief executive Andy Jassy and his team made this week.

Ms Beth Galetti, Amazon’s top human resources executive, said: “We anticipate keeping this pause in place for the next few months, and will continue to monitor what we are seeing in the economy and the business to adjust as we think makes sense.” 

Apple 

The iPhone maker has paused hiring for many jobs outside of those in research and development, an escalation of an existing plan to reduce budgets heading into next year, according to people with knowledge of the matter.

The break generally does not apply to teams working on future devices and long-term initiatives, but it affects some corporate functions and standard hardware and software engineering roles.

Dapper Labs

Dapper Labs founder and CEO Roham Gharegozlou said in a letter to employees on Wednesday that the firm has laid off 22 per cent of its staff. He cited macroeconomic conditions and operational challenges stemming from the company’s rapid growth.

Dapper Labs created the NBA Top Shot marketplace for non-fungible tokens, a digital asset class that has seen a steep drop in demand since the crypto market downturn.

Galaxy Digital

Galaxy Digital Holdings, the crypto financial services firm founded by billionaire Michael Novogratz, is considering eliminating as much as 20 per cent of its workforce. The plan may still be changed and the final number could be in the range of 15 per cent to 20 per cent, according to sources. Galaxy’s shares have plummeted 70 per cent this year, part of a rout for cryptocurrencies.

Intel

Intel is cutting jobs and slowing spending on new plants to save US$3 billion (S$4.3 billion) next year, the chipmaker said last week. The hope is to save as much as US$10 billion by 2025, a plan that went over well with investors, who sent the shares up more than 10 per cent on Oct 28. Bloomberg News reported earlier that the headcount reduction could number in the thousands. 

Lyft

Lyft’s cost-saving efforts include divesting its vehicle service business. The company, which is preparing to report third-quarter results on Monday, has already said it will freeze hiring in the US until at least next year. It is now facing even stiffer headwinds. 

“We are not immune to the realities of inflation and a slowing economy,” co-founders John Zimmer and Logan Green said in a memo. “We need 2023 to be a period where we can better execute without having to change plans in response to external events...”

Opendoor

Opendoor Technologies said this week that it is laying off about 550 employees – roughly 18 per cent of its headcount. The company, which practises a data-driven spin on home-flipping called iBuying, is coping with slowing housing demand because of higher mortgage rates. The iBuying model relies on acquiring homes, making some repairs and then selling the properties, often in a short period of time.

Qualcomm

Qualcomm on Wednesday said it has frozen hiring amid a faster-than-feared decline in demand for phones, which use its chips. It now expects smartphone shipments to fall in the double-digit per cent range this year, worse than the outlook it gave just three months ago.

Seagate

Seagate Technology Holdings, the biggest maker of computer hard drives, said last week that it is paring about 3,000 jobs. Computer suppliers, including Seagate and Intel, have been hit hard by a slowdown in hardware spending.

Customers are sitting on a pile of extra inventory, hurting orders and weighing on Seagate’s financial performance, said CEO Dave Mosley. This necessitated cuts.

“We have taken quick and decisive actions to respond to current market conditions and enhance long-term profitability,” he added.

Stripe

Payments company Stripe, one of the world’s most valuable start-ups, is cutting over 1,000 jobs. The 14 per cent staff reduction will return its headcount to almost 7,000 – its total in February. Co-founders Patrick and John Collison told staff that the firm needs to trim expenses more broadly as it prepares for “leaner times”.

Twitter

The upheaval at Twitter has more to do with its recent buyout – and the accompanying debt – than economic concerns. But the company is facing the deepest cuts of its peers right now.

Mr Musk, who acquired Twitter for US$44 billion last month, plans to eliminate about 3,700 jobs, said sources.

The new owner plans to inform affected staff on Friday. He also intends to reverse the company’s work-from-anywhere policy, asking remaining employees to report to offices. BLOOMBERG

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