Tech giants prioritize profit in 2024 workforce reductions

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NEW YORK, Jan 11: The tech industry has ushered in the new year with a series of announcements about substantial job cuts, echoing the trends seen at the beginning of 2023, which preceded the most significant industry retraction in over a decade.

Amazon.com has cut hundreds of workers in its content-creation units, including Prime Video and live-streaming platform Twitch. Meanwhile, Unity Software, the creator of technology powering popular mobile games like Pokemon Go, has declared a 25% reduction in its workforce, resulting in the elimination of approximately 1,800 jobs.

Although these cutbacks are smaller in scale compared to the previous year’s layoffs by Meta Platforms and Salesforce, they highlight that the tech industry is not yet back to the rapid growth observed for much of the last decade. Many companies are shifting their focus from rapid revenue growth to profitability, especially with the backdrop of higher interest rates.

Poonam Goyal, an analyst at Bloomberg Intelligence, suggests that Amazon’s job cuts are likely aimed at streamlining costs to enhance efficiency and increase earnings.

Worker anxiety is particularly prevalent in creative roles, where the proliferation of generative artificial intelligence (AI) raises concerns about job displacement. Duolingo, the creator of a widely used mobile language learning app, has cut 10% of its contractors, including translators, partly due to increased AI usage.

Some analysts on Wall Street anticipate a wave of mergers in 2024, following a relatively quiet year for deal-makers in 2023. Historically, large acquisitions often result in workforce redundancies, as exemplified by Hewlett Packard Enterprise’s CEO Antonio Neri, who mentioned potential cost reductions through automation after announcing a $14 billion merger with Juniper Networks.

Despite signs of industry challenges, data indicates that the job market is stabilizing. Layoffs.fyi, which tracks job reductions in the tech sector, reports a decrease in the number of tech employees laid off since the peak in the first quarter of 2023. In total, 1,186 tech companies eliminated over 262,600 jobs in the previous year. Since January 1, 2024, 18 tech companies have let go of 2,945 workers.

Bert Bean, CEO of Insight Global, a staffing company, notes that while workforce cuts seem to be stabilizing, employers remain cautious about hiring, and job candidates are less likely to receive multiple offers in the current environment focused on profitability.

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