Microsoft, Amazon, Salesforce… Tech continues to slim down

The products and services of these companies had been acclaimed during the periods of confinement, telework and distance school. They then hired with a vengeance: Microsoft had hired 40,000 people during its last financial year (2021-2022), more than double the previous year, notes the FinancialTimes.

But tech is now affected by the problems of the moment, which spare no sector: inflation, rising rates, and declines in revenue from targeted advertising and marketing. Trends that should continue to affect its job market in 2023.

What if laying off was contagious? According to the great management specialist Jeffrey Pfeffer (Stanford), this phenomenon is mainly due to mimicry between large companies. He explains it on his university’s website:

“Layoffs in the tech sector are essentially an example of social contagion, in which companies mimic what others are doing. If you are looking for the reasons why companies lay off, the reason is that everyone does. The dismissals are the result of imitative behavior and are not particularly evidence-based.”

If Jeffrey Pfeffer admits that the sector could be affected by a recession, and that there may be bubbles in valuations, he takes the example of Meta:

“Has Meta over-hired? Most likely. But is that why they are laying off workers? Of course not. Meta has a lot of money. These companies all make money. They lay off because other companies do.

Microsoft’s explanation. Microsoft CEO Satya Nadella, attending the World Economic Forum in Davos, explained the announcements as the result of reduced consumer demand:

“During the pandemic, there has been a rapid acceleration. I think we’re going to go through a phase today where there’s some degree of normalization in demand.”

According to several American media, however, Microsoft is about to invest 10 billion dollars in OpenAI, the intriguing NGO turned lucrative company, to which we owe ChatGPT.

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