PayPal, Amazon, Google, Facebook sackings slammed as ‘kneejerk’ reaction
Brutal firings from some of the world’s biggest companies – resulting in thousands losing their jobs – have been criticised after they made billions in profit.
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Companies who experienced “phenomenal growth” during the pandemic – often raking in billions in profit – that are now laying off thousands of employees have been slammed for their “knee jerk reaction”.
The latest tech outfit to announce mass sackings was PayPal which is slashing its global headcount by 2000 employees – about 7 per cent of its workforce.
PayPal president and CEO Dan Schulman wrote on Tuesday the cuts were made to “address the challenging macro-economic environment” in a post on its website.
He added the company had made “substantial progress in right-sizing our cost structure” but there was more work to be done.
“Change can be difficult – particularly when it includes valued colleagues and friends departing,” he said.
“We will face this head-on together, drawing on the unparalleled scale of our global platform, the strategic investments we have made to strengthen our core capabilities, and the trust and loyalty of our customers.”
In November, PayPal announced it expected revenue for the year to jump 10 per cent to $27.5 billion, yet it now joins a long list of corporate giants who have fired staff in recent months.
UNSW Business School Professor Barney Tan described the lay-offs from these companies as “a bit of a knee-jerk reaction”.
“Most of those that have done the big lay-offs are companies that have experienced phenomenal growth during Covid-19, which led to an increase in the demand for online services,” he said.
“Now, a confluence of number of factors is behind the current situation, which includes over hiring during the pandemic, a decline in demand post-Covid, rising inflation and interest rates, and an uncertain economic landscape.”
Last month, Amazon chief executive Andy Jassy told employees the company would act on the findings of a recent review and cut more than 18,000 jobs – around 6 per cent of the online retail giant’s global corporate workforce.
This is despite Amazon breaking through the billion-dollar revenue mark in Australia after its sales doubled during 2020 as the Covid-19 pandemic fuelled a surge in online buying and it surged again in 2021 to $A1.75 billion.
Google’s parent company Alphabet also enacted large-scale restructuring, announcing that 12,000 jobs would be cut globally, despite it earning more than $A7 billion in Australia in 2021, while Alphabet’s third-quarter sales globally topped $US57.27 billion ($A81.23 billion).
Meanwhile, Facebook parent company founded by Mark Zuckerberg announced the first lay-offs in its 18-year history in November – cutting 13 per cent of its workforce – about 11,000 jobs.
Its profit more than halved but it still made $US4.4 billion ($A6.9 billion) in the third quarter of the year.
Global software giant Salesforce announced in January it would cut about 8000 employees, in the biggest round of lay-offs in its 24-year history, after already letting go of about 1000 people in a round of redundancies in November.
This is despite it announcing a $US7.84 billion ($A11.12 billion) revenue in November 2022 for the third quarter, while it also boasted a year of record growth two years ago delivering $US21.25 billion ($A30 billion) in revenue, up 24 per cent year-over-year, for the fiscal year ending January 31, 2021.
But Prof Tan said there was no doubt that longer term the tech sector would still need more employees and those impacted would likely be snapped up by start-ups as well as traditional businesses that have been struggling to attract tech talent for some time.
“For instance, many younger people may have been drawn to the larger tech firms because they want to work at the cutting edge of innovation,” he added.
“But there are a good number of innovations that are actually driven by smaller tech start-ups, which have traditionally found it hard to compete for talent as there are constraints on the material and pay incentives they can offer.
“At the same time, with all the innovations that have emerged in recent years, traditional businesses – for example, companies that have never defined themselves as ‘tech’ companies – also need talent to harness those innovations to enhance what they do. These traditional businesses have also typically struggled to attract tech talent.”
Prof Tan also believes the market for tech talents is not shrinking, but this is just a period of adjustment “where those organisations that were more attractive to tech talents and had the resources to hire almost indiscriminately during a period of boom, are now finding that they have to let them go”.
“The impact on Australia of all this is likely to be minimal because we still have many large businesses that have been crying out for tech talent,” he noted.
“If anything, this global development may see a greater availability of tech talent for Australia as the talents displaced from the US, Europe and the UK may now be forced to move.”
Originally published as PayPal, Amazon, Google, Facebook sackings slammed as ‘kneejerk’ reaction
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