Global Companies Continue to Downsize

The struggle of New York's 20,000 yellow cab drivers / Mark Peterson(December 31, 2021)

 Since the second half of last year, 2022, there has been a trend of downsizing among global companies. After acquiring Twitter in October 2022, Elon Musk laid off around 80% of Twitter's workforce. This was followed by Meta (formerly Facebook) cutting about 10,000 people, or 13% of its workforce, and Amazon's decision to cut more than 18,000 jobs, making it the largest round of cuts among big tech companies. U.S. business broadcaster CNBC estimated that the total number of cuts by big tech companies could be close to 80,000. It's not just big tech companies that are downsizing. Wall Street's biggest investment banks, including Goldman Sachs, Citigroup, and Morgan Stanley, are also reducing their workforces. Domestic companies are also recruiting for retirees. 

 

 For the digital industry, which has been on a steady rise since the pandemic, these cuts are disconcerting. Employees in the tech industry have been paid very high wages and hired amid fierce competition for talent among companies to fuel their rapid growth. Why has the tech labour market suddenly become so tight with talent?

 

 The main reason for the sudden reduction in staff is the economic downturn and declining performance. With the U.S.-China economic war, Russia's invasion of Ukraine, and the prospect of stagflation, where prices are rising and the economy is stagnating, companies are feeling threatened by cost as they fail to attract investment or existing investors start to pull out. Start-ups, which are highly dependent on investment, are particularly affected. As a result, many companies are cutting costs by reducing their workforce in order to stay afloat. 

 

 The pandemic has also slowed down the rapidly growing digital industry. When Meta changed its name from Facebook to Meta in July 2021, the company stated its ambition to make Metaverse-related industries its main development item. However, this year, Meta's losses in Metaverse-related industries reached KRW 13 trillion. The company was angry that it had hired too many people and expanded its business based on an optimistic outlook for the metaverse, and the emergence of short-form content such as TikTok made it difficult to make significant progress on Facebook. It is no longer possible to rely on existing products. 

 

 The fact that big tech companies are facing an unprecedented crisis and are trying to shore up their finances by reducing their workforce without a backup plan shows how weak the management of global big tech companies has been. This reduction in the workforce is expected to serve as an opportunity for the digital industry to set the business direction with a more critical perspective than before, and to achieve a stable restructuring by efficiently redeploying the workforce.

 

 The fact that big tech companies are facing an unprecedented crisis and are trying to shore up their finances by reducing their workforce without a backup plan shows how weak the management of global big tech companies has been. This reduction in the workforce is expected to serve as an opportunity for the digital industry to set the business direction with a more critical perspective than before, and to achieve a stable restructuring by efficiently redeploying the workforce.

 

Lim Nayun(2-8)¹ | Staff Reporter

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1) nayunqq0603@naver.com