Companies Are Taking Advantage of a Loophole in This New AI Hiring Law
Cohere Is on Track to Raise $1 Billion. What That Means for AI Startups in 2024
Does Your HR Department Use AI for Hiring? Here's What You Should Know
Biden Underscores Small-Business Tour as New Hampshire Primaries Kick Off
Gallup Report: Employee Engagement Is in a Rut, But You Can Give It a Boost
Startup CEOs Are Getting Optimistic Again
The State of Unions: What CEOs Need to Know
Companies have wasted no time in kicking off 2024 with news of layoffs.
Earlier this month, Alphabet, Google's parent company, laid off over 1,000 workers across several divisions. That may seem modest compared to the 12,000 workers the tech giant laid off around this time last year. However, in an internal memo sent a couple of weeks back, CEO Sundar Pichai alluded to the potential for more layoffs, saying the company will have to "make tough choices" when it comes to the company's capacity for future investments in AI and other focus areas, CNBC reported.
Other large companies across the tech sector are following a similar playbook. E-commerce giant Amazon is eliminating hundreds of jobs in an effort to rein in costs. Messaging platform Discord, language learning app Duolingo, and gaming company Unity Software are among others, according to the Wall Street Journal. In total, at least 6,505 workers at U.S.-based tech companies have lost their jobs so far in 2024, Crunchbase's Tech Layoffs Tracker estimates.
And more layoffs are likely to come in the near future as large companies continue to shift strategies, notes Richard Wahlquist, CEO of the American Staffing Association.
During the past year, large companies such as Google and Amazon have come to grips with the painful reality that they over-hired as the country emerged from pandemic lockdowns, Wahlquist says. Now, with interest rates at record levels, these companies face reduced prospects for growth and a need to reduce costs.
Research firm Op4G's CFO Outlook Survey polled 100 tech CFOs from businesses with revenues from $50 million to $3 billion or more in October 2023 and found that many plan on continuing to downsize through 2024. Rather than making deals or raising capital, 55 percent of CFOs reported their highest priority for 2024 to be optimizing costs through the use of artificial intelligence.
While these CFOs could be focusing on AI to help employees free up more time, the trend could "absolutely indicate more layoffs in the near future," says Hank Galligan, a national technology practice leader at BDO, a public accounting, tax, consulting and business advisory firm.
One trend to look for in 2024 is rolling or tiered layoffs, Wahlquist adds. Instead of reducing headcount all at once, companies will likely conduct smaller rounds of layoffs over time, perhaps targeting different departments at different times -- this allows for more flexibility and for easier workload transitions for current employees. "No business wants to guess wrong and cut too many jobs too soon, which could put them at a competitive disadvantage, lower employee morale, and negatively impact the company's brand and reputation as a great workplace," Wahlquist says.
That said, there is some good news: The tech sector is rather an outlier when it comes to large staff cuts. The larger trend shows that companies across other industries are laying off people at similar rates to before the pandemic, notes Nick Bunker, economic research director for North America at the Indeed Hiring Lab.
"The most recent data on layoffs show employers are still holding onto workers at a higher rate than before the pandemic," he says. "Tech and some other sectors are going through a period of retrenchment, but that's not true for most industries."
Massive tech layoffs are boon, however, to small businesses seeking to hire skilled tech workers. The 2023 layoffs may have had an impact in that regard. In December, roughly 40 percent of small-business owners said they had job openings they could not fill, down from closer to 50 percent in 2022, according to the National Federation of Independent Business.
While hiring has slowed slightly across many sectors, overall unemployment remains steady at 3.7 percent, according to the Bureau of Labor Statistics' most recent jobs report. "The economy looks like it will soft land and may even avoid a recession, which could make concerns of industry consolidation and restructurings less concerning," Scott Y. Stuart, CEO of a corporate renewal nonprofit called the Turnaround Management Association.
There are, of course, alternative ways to deal with low turnover that don't involve layoffs, including offering generous retirement packages to incentivize attrition and focusing on internal mobility. If layoffs are necessary, HR leaders should do whatever they can to first help individuals find new roles within the company, notes Lindsay Witcher, global managing director at HR firm Randstad RiseSmart. That offers people employment, potentially eliminates talent acquisition costs for another role, and lowers the chance of a severance case.
"Even if there isn't an opportunity found and they do transition out of the organization, at least the employee feels like the effort was made, which is really important," says Witcher.
A refreshed look at leadership from the desk of CEO and chief content officer Stephanie Mehta
Privacy Policy
login
who are we?
contact us
qosheapp
Toi Staff
Gideon Levy
Belen Fernandez
Andrew Mitrovica
Mort Laitner
Rami G Khouri
Ali Fathollah-Nejad
Nikkei Editorial
visit website
