2022-2023 layoffs, another bubble burst?

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md5crypto

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  • #1
    www.npr.org

    It's the end of the boom times in tech, as layoffs keep mounting

    Amazon began layoffs, reportedly affecting as many as 10,000 employees. That follows job cuts at Meta, Twitter, and Stripe, with CEOs citing economic uncertainty and a slowdown in online ad buying.
    www.npr.org www.npr.org

    Just starting with FAANG:

    Meta - 11K
    Amazon - 10K
    Netflix - 450
    Apple - hiring slowdown
    Alphabet - hiring slowdown 50%

    other Big N:

    Microsoft - 1K
    Stripe - 14%
    Twitter - 50%
    Snap - 20%

    I haven't seen tech job cuts like this since 2000. This is definitely a bad time to look for a software job competing with all those talented people let go. The next 12-18 months is going to be very painful.
     
    theevilsharpie

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  • #2
    It definitely is not a favorable market for tech jobs right now, but I don't think it's anywhere near as bad as 2000 yet.

    Right now, the tech industry is dealing with a number of factors all hitting it at once:
    • Reduced demand for certain services (e.g., at-home gyms, food delivery, teleconferencing, etc.) as the pandemic winds down and people return to offices and other pre-pandemic habits
    • Increased cost of capital as a consequence of rising interest rates
    • Growth in the smartphone and cloud computing industries slowing down as the enter maturity
    • TikTok and Elon Musk disrupting the existing social media landscape
    • The cryptocurrency sector imploding
    • Inflation and uncertainty are discouraging investments as a whole

    It sounds like a lot, but there's pockets of health (companies that have reached sustainable profitability are doing well), and the big tech companies (Meta excluded) aren't in any danger of disappearing and are basically just returning to a rational staff size (after going on a ridiculous hiring spree during the pandemic).

    Overall, I suspect this will be similar to the early days of the pandemic, when companies retrenched for a bit in the face of uncertainty, and then resumed growth activities once the uncertainty cleared up. I'd expect things to go the same way this time around, with caution lasting maybe a year or two.

    I do see several lasting effects happening:
    • Business models that don't have a clear path to profitability and need perpetual infusions of funding are probably doomed.
    • Anything related to Blockchain or cryptocurrencies is probably doomed
    • Compensation for software engineers (and related) will come back down to earth
    • Smaller businesses that were priced out by the FAANGs and VC-funded unicorns of the world will have access to a broader talent pool
     
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    YoHo

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  • #3
    Also, we're not yet seeing the cascade effects yet to the HW companies. That was what made the Dotcom burst so terrible. Cisco, 3com and the server vendors got their manufacturing up and ready to support the needs of the bubble just as the bubble burst so they were left with tons of unprofitable manufacturing. That does not seem to be the case yet this time.
     
    computerninja

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  • #4
    YoHo said:
    Also, we're not yet seeing the cascade effects yet to the HW companies. That was what made the Dotcom burst so terrible. Cisco, 3com and the server vendors got their manufacturing up and ready to support the needs of the bubble just as the bubble burst so they were left with tons of unprofitable manufacturing. That does not seem to be the case yet this time.
    Click to expand...
    The future is yet to be seen with this. I think the hyper-growth of the past 4-10 years is going to come back and bite "us" (those who work in Tech/SaaS companies) in the ass. I am hopeful that patience, hard work, and perseverance will pay off in the end.
     
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    YoHo

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  • #5
    Well, I'm not going to say nobody will be affected, but I think the hardware side has been much smarter than in the past.

    And given the current backlog due to supply chain hell, there are more pressing issues.

    The big players such as AWS, Azure, Google and Facebook build their own hardware at this point so their moves have minimal impact on say HPE or Dell. Intel, AMD might feel it and are already having problems on the consumer side, but I've not heard any slow down in the big cloud provider's DC deployment yet. It might be interesting to see how an industry slow down affects ARM server deployments. Do they get a boost, because they are cheaper/more efficient? Or are they punished for being too much of a gamble compared to reliable and well understood product.
     
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    theevilsharpie

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  • #6
    YoHo said:
    Intel, AMD might feel it and are already having problems on the consumer side, but I've not heard any slow down in the big cloud provider's DC deployment yet.
    Click to expand...

    There has been a definite slowdown in cloud hardware spending. It doesn't seem that way at first because Intel has been taking the brunt of that slowdown due to their generally uncompetitive data center products, but growth on the CPU side has been slowing (not sure about GPU).
     
    skazz

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  • #7
    I'm going to disagree. If you look at recent hiring in those companies, it has been vastly more than the layoffs. I think this is correction on their part as we settle back into normal life post-covid.

    Furthermore, software engineering is still critically understaffed globally. Finding enough software engineers and IT staff is pretty much the number one blocker of moving workloads to the public cloud right now, and it's not going to change any time soon. I suspect most of those let go were more in the sales and marketing side, whereas high quality software engineers will either stay or have their next job lined up pretty much immediately.
     
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    md5crypto

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  • #8
    skazz said:
    I'm going to disagree. If you look at recent hiring in those companies, it has been vastly more than the layoffs. I think this is correction on their part as we settle back into normal life post-covid.

    Furthermore, software engineering is still critically understaffed globally. Finding enough software engineers and IT staff is pretty much the number one blocker of moving workloads to the public cloud right now, and it's not going to change any time soon. I suspect most of those let go were more in the sales and marketing side, whereas high quality software engineers will either stay or have their next job lined up pretty much immediately.
    Click to expand...
    Also there is a difference in caliber of SWE who can be the prime movers of getting code into the cloud vs maintainers of that. Like 100x talent level.
     
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    Horatio

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  • #9
    md5crypto said:
    Also there is a difference in caliber of SWE who can be the prime movers of getting code into the cloud vs maintainers of that. Like 100x talent level.
    Click to expand...
    So for a lot of large scale services, the SWEs and the people maintaining the services are the same people. Not front line ops, for sure, but everywhere I've worked, SWEs have been on call for service issues.
     
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    wrylachlan

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  • #10
    How many of the layoffs are software engineers and how many are in other parts of the business? We know from ongoing reporting that a substantial proportion of the jobs slashed at Twitter were in content moderation, ad sales, marketing, etc. Yes there are definitely a fair number of software engineers in there too, but I doubt that the numbers up thread really represent a software engineer apocalypse.
     
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    Horatio

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  • #12
    md5crypto said:
    If people think that these layoffs are going to just roll back to Feb 2020 head counts, that's wishful thinking. I think we're going to see layoffs in the 500K range by spring 2023. This is an opportunity for all engineering orgs to shake out the incompetents.
    Click to expand...
    That would be a crazy amount of layoffs, depending on which companies and job functions that you're taking in to the scope. Like FAANG and friends don't even employ that many SWEs, but if you're talking say all SWE jobs across all industries or even WW, I can see it.
     
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    Shavano

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  • #13
    Horatio said:
    That would be a crazy amount of layoffs, depending on which companies and job functions that you're taking in to the scope. Like FAANG and friends don't even employ that many SWEs, but if you're talking say all SWE jobs across all industries or even WW, I can see it.
    Click to expand...
    I'd hesitate to predict absolute numbers but I'm confident they'll overcorrect before realizing they do need a certain number of SWE's to meet their business goals and keep the lights on. Even scaled-back business goals.

    And it won't be confined to software either.

    I'm a tier 1 manager and I've been through multiple rounds of belt tightening before. When the come to me and ask me to cut somebody from my team I'll ask them what project they canceled and what products they want us to stop supporting.
     
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    Horatio

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  • #14
    Shavano said:
    When the come to me and ask me to cut somebody from my team I'll ask them what project they canceled and what products they want us to stop supporting.
    Click to expand...
    At the companies I've worked at, managers are informed who is getting laid off in 1 of 2 ways. One way is directly, where the employee just gets laid off, and the manager is informed, and the second way, the manager finds out because they are told their project/product/etc. is being cancelled, and they need to find new jobs either within or without the company. In neither case is the first level manager asked who to cut. In the companies I've worked for, I think the VP level is the first level where people are in the know ahead of time.
     
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  • #15
    md5crypto said:
    If people think that these layoffs are going to just roll back to Feb 2020 head counts, that's wishful thinking. I think we're going to see layoffs in the 500K range by spring 2023. This is an opportunity for all engineering orgs to shake out the incompetents.
    Click to expand...

    Not saying it won't get worse, but the largest of these layoffs (Meta) doesn't even get the company back to Feb 2022 headcount. They would have to lay off another 30,000 people to get back to Feb 2020.
     
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    md5crypto

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  • #16
    HappyBunny said:
    Not saying it won't get worse, but the largest of these layoffs (Meta) doesn't even get the company back to Feb 2022 headcount. They would have to lay off another 30,000 people to get back to Feb 2020.
    Click to expand...
    Believe me it's going to happen. Maybe spring is too early, but within 18-24 months you'll see the 500K-1 million headcount reduction worldwide. Engineering orgs are figuring out that they can maintain 90% of productivity with 50% of their HC.
     
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    lithven

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  • #17
    md5crypto said:
    Believe me it's going to happen. Maybe spring is too early, but within 18-24 months you'll see the 500K-1 million headcount reduction worldwide. Engineering orgs are figuring out that they can maintain 90% of productivity with 50% of their HC.
    Click to expand...
    For how long? You can do phenomenal work with a limited team for a short time but burn out and work-life balance are real. Companies (mostly) still don't hire people if they don't have a need for it. I'm also concerned the 10% you're cutting off in your "90% of productivity" is the 10% that happens at the end of a project.
     
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  • #19
    md5crypto said:
    Believe me it's going to happen. Maybe spring is too early, but within 18-24 months you'll see the 500K-1 million headcount reduction worldwide. Engineering orgs are figuring out that they can maintain 90% of productivity with 50% of their HC.
    Click to expand...
    Why should we believe you? You doubled your estimate, and somewhere between quadrupled and hextupled your headcount number inside of 5 posts. Also you say engineering orgs are figuring out things with zero evidence that they're doing so much less succeeding at it.
     
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    ant1pathy

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  • #20
    md5crypto said:
    Believe me it's going to happen. Maybe spring is too early, but within 18-24 months you'll see the 500K-1 million headcount reduction worldwide. Engineering orgs are figuring out that they can maintain 90% of productivity with 50% of their HC.
    Click to expand...

    Sounds like one of those "super dev" arguments that never actually holds true in reality.
     
    Nevarre

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  • #21
    I remember the .com bust all too well, but in that market there were some really fanciful bets being made that failed to produce viable companies (at least at the level of tech maturity that existed 22 years ago) or they experienced fundamental changes that rendered a lot of companies just unable to be profitable vs. now so far we're seeing general economic headwinds that cross multiple sectors.

    If you look at the companies individually that are doing the 'big' layoffs, they paint individual stories. There may be some overall market headwinds and markets outside of N. America are particularly rough.

    Meta is laying off people because they've sunk stupidly large amounts of money into a Metaverse that is poorly articulated and is outright opposed by lots of, if not the overwhelming majority of consumers. Maybe the tech isn't 'there' yet and very likely it's something where there's no trust that Meta should be a party involved with a Metaverse-like project but that's on the back of a lot of poor decisions and declining interest in their core products (again driven by years of bad decisions.)

    Amazon may be resizing, but 10,000 employees is only 0.6% of their 1.6 million. They're just not all that comparable in terms of the mix of labor they need for various divisions compared to other tech giants and I have yet to see anywhere that does a breakdown of tech/non-tech workers in that number although a lot of that is attributable to Alexa's inability to be monetized effectively. Still they're up ~200k people from 2020 so in context it looks less bleak. All they need to figure out is how to "fix" Alexa's path to profitability and they can afford to fail for a lot longer on the strength of AWS and eCommerce.

    Twitter is obviously a special case where a new captain came aboard the ship and is trying to steer it by drilling holes in the hull. Let that sink in.


    The companies slowing hiring or being more careful with hiring are the ones that are probably more realistic indicators. There are still lots of jobs that need to be filled, even if not all of those align with developers who want to live in the Bay Area.
     
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    Nevarre

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  • #23
    prc117f said:
    Why did Amazon double its headcount from 2019 to now? Thats some crazy numbers.
    Click to expand...

    I'm going to go with "stores closed and everyone bought everything they could online-only for the last three years". Warehouses, delivery drivers and all the infrastructure for that are employees too. You've got all the back-end work to build out the computing infrastructure to support that growth, and AWS has grown by leaps and bounds as more resources were needed to be spun up quickly to facilitate WFH. They're also making a push into medical and the video division isn't stagnant either.

    It's a perfect storm and in context they're not downsizing much at all. The Alexa stuff isn't super profitable for lots of reasons, and from a computing standpoint that looks like the division hardest hit.
     
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    Exordium01

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  • #29
    I’ll stake out the bullish position here. Actual productive companies that make products and turn profit have been starved for software engineers because speculative startups paid way above market rate and/or had more sexy projects. There are still way more programming jobs than there are laid off programmers but salaries are more in line with other engineering jobs and they aren’t in the Bay Area.

    I think this downturn is going to wipe out a lot of paper wealth but not be felt too much by the average person.
     
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  • #33

    MSFT CY23Q2 Results are in

    FY23 Q4 - Press Releases - Investor Relations - Microsoft Microsoft stock drops as Azure growth slows, earnings top estimates (yahoo.com) I wanted to say this was kind of a meh quarter, but really, it's not - Revenue up 8% and profit up 20(!)% y/y. All the usual business are killing it, though...
    arstechnica.com arstechnica.com

    Just hopping back in here to connect these two threads.

    There has been a moderate amount of economic suckage, but in the 9 months since this prognostication, it doesn't look like systemic layoffs took hold.

    Also Twitter/X is still "special" for the most pejorative version of the term.
     
    theevilsharpie

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  • #34
    Nevarre said:
    There has been a moderate amount of economic suckage, but in the 9 months since this prognostication, it doesn't look like systemic layoffs took hold.
    Click to expand...

    There have been a substantial number of layoffs in the tech sector, along with hiring freezes.

    While things seem to be contained to tech (and to a lesser extent -- real estate), which perhaps is not enough to make the issue "systemic", the labor market for the tech sector is in a very depressed state right now.
     
    Nevarre

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  • #36
    I don't think there's any argument that this is a period where there has been a fair amount of job churn, with layoffs from larger companies and the last few years have been more challenging economically.

    The point is that it hasn't been the .com bust in 2001 (which annihilated the industry I was in, along with the overall economy of tech hubs like this one) or the 2008 bust driven by financial and housing markets which was less laser-targeted at IT-centric companies but hit everyone.

    A lot of indicators are "off of pandemic peak but still higher than 2019." The original NPR article probably captured the nuances better-- the pandemic boom is over and that trajectory of growth isn't going to sustain itself. The big companies who were able to invest most during the pandemic have shed employees or slowed hiring, but that just means that small/mid size companies-- or even big companies that were hampered by the pandemic-- have now been able to hire. There are definitely companies that are faring worse than others, and some of that just relates to how they've been able to pivot, or not, during the normal->pandemic->post-pandemic phases or other strongly negative influences like Elon Musk buying your company.
     
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    poochyena

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