This layoff season has taught tech employees a troublesome lesson: they’ll nonetheless lose their jobs even when their firm is doing fantastic.
The newest instance of this got here final week as typing assistant startup Grammarly — final valued at $13 billion — introduced it could lower round 230 roles as a part of a “enterprise restructuring.”
Rahul Roy-Chowdhury, who was appointed Grammarly CEO final yr, made it clear that the cuts have been “not a cost-cutting train.” In a memo to workers, Roy-Chowdhury insisted that the corporate’s “monetary place is, and stays, sturdy.”
As a substitute, the layoffs had been performed as a method of recalibrating sources for “the AI-enabled office of the longer term.”
For Grammarly, a enterprise that gives customers writing help, meaning adjusting to a brand new age of AI chatbots and private brokers that might act as rivals.
Layoffs, then, have been an unlucky consequence of that adjustment.
“As we strengthen our focus towards driving the AI-enabled office and deepen our technical investments in AI, we’ll want a unique mixture of capabilities and skillsets,” Roy-Chowdhury instructed staff.
“We additionally want to revamp our group to enhance the standard and pace of collaboration — and meaning, amongst different issues, restructuring roles and co-locating sure groups.”
The Grammarly cuts function a reminder that staff aren’t simply liable to dropping their jobs at companies burning by means of money.
Grammarly just isn’t alone on this strategy. Because the begin of the yr, 141 tech firms have made layoffs affecting 34,250 employees, in line with on-line tracker Layoffs.fyi. For context, this yr’s batch of layoffs nonetheless pales compared to final yr, when nearly 140,000 had misplaced their jobs by February.
That was a time when many startups and Large Tech gamers have been in search of to appropriate the extreme hiring revamped the pandemic and curb spending in a high-inflation setting. Many on the time, like Meta, had massively loss-making divisions to fret about.
In lots of cases, the smaller scale of the layoffs hitting tech firms this yr displays how a lot of the decision-making course of this time round is extra about fine-tuning.
Discord CEO Jason Citron, as an example, instructed staff final month that plenty of its hiring in recent times — hiring that elevated its headcount 5 occasions over since 2020 — had resulted in a corporation that was “much less environment friendly,” resulting in the choice to layoff 17% of workers.
As The Verge famous, the choice to appropriate the inefficiencies was made regardless of the corporate seeming to not be in “dire monetary straits.” In different phrases, the corporate, final valued at $15 billion, grew, however at a quicker tempo than it wanted to. That by no means means it’s in unhealthy form.
The pattern is likely to be even clearer when taking a look at one in all tech’s huge winners of the final yr.
Final month, days earlier than Microsoft reported a report $62 billion in income for the ultimate quarter of 2023, the tech large lower 1,900 roles from its Activision Blizzard and Xbox divisions.
This can be a firm that’s doing something however struggling proper now, with its guess on OpenAI, the launch of the AI Copilot device and powerful demand for cloud computing serving to it develop. It made layoffs nonetheless.
