Tech’s job cuts give little hope for return to rapid growth

NEW YORK - The new year has kicked off for the technology industry, with several companies announcing significant job cuts. It is reminiscent of how 2023 began, which preceded the sharpest industry retraction in over a decade.

Amazon.com is cutting hundreds of workers across content creation units, including Prime Video and live-streaming site Twitch. Unity Software, the maker of technology that underpins popular mobile games such as Pokemon Go, said it would reduce its workforce by 25 per cent, cutting about 1,800 jobs.

Though smaller than the cuts a year ago from Meta Platforms and Salesforce, the moves show the tech industry still is not back to the rapid growth it saw for much of the last decade. With higher interest rates, many companies have re-oriented to focus on profit rather than rapid revenue growth.

Bloomberg Intelligence analyst Poonam Goyal said Amazon’s job cuts are “likely just a move to further streamline costs and improve efficiency to increase earnings”.

AI anxiety in Big Tech

Worker anxiety is particularly acute in creative jobs that may be affected by the proliferation of generative artificial intelligence (AI), which can reduce the amount of labour needed to write or produce video. Duolingo, which makes a widely used mobile language learning app, cut 10 per cent of its contractors, such as translators, in part due to greater use of AI.

Some on Wall Street expect 2024 to bring a wave of mergers after a sleepy 2023 for deal-makers. Historically, large acquisitions have resulted in workforce redundancies. After announcing a US$14 billion (S$18.7 billion) merger with Juniper Networks, Hewlett Packard Enterprise chief executive officer Antonio Neri said on Jan 10 in an interview that costs could be cut at Juniper through automation.

Despite signs of gloom, data shows the job market is stabilising. The number of tech employees laid off

peaked in the first quarter of 2023

and has steadily fallen since then, according to Layoffs.fyi, which tracks job reductions across the industry.

The website calculated that 1,186 tech companies eliminated a total of more than 262,600 jobs in 2023. Eighteen tech companies have let 2,945 workers go since Jan 1, according to the website.

“I’d say the dust is settling – you’re starting to see companies gear up to say the worst is behind us,” said Mr Bert Bean, chief executive officer of staffing company Insight Global.

But even if workforce cuts have stabilised, many employers remain profit-focused. Mr Bean added that companies remain cautious about hiring, and it is less common for job candidates to receive multiple offers. BLOOMBERG