Big Tech's hiring splurge makes cost cuts even harder
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In just the past year, Microsoft, Facebook and Google parent Alphabet have all seen their headcount rise by upwards of 20%. As Big Tech companies shift from growth to belt tightening, they will have to reckon with just how many employees they've hired since the pandemic began.
Why it matters: Hiring freezes may not do enough to cut costs, as companies' payroll will rise significantly just due to all the employees hired in the last year.
The big picture: Nearly all large tech companies say they expect to slow hiring this year, with many turning to partial or complete hiring freezes. Microsoft has already conducted a small number of layoffs, Snap is cutting 20% of staff and other tech companies have indicated layoffs could be coming.
- Meta has said that most departments outside of a few priorities will see lower budgets in the coming year. "So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year," CEO Mark Zuckerberg said on the earnings conference call this week. "In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today."
- Microsoft CFO Amy Hood told analysts that any growth above current levels "should be minimal" this quarter.
- Alphabet CEO Sundar Pichai said any headcount growth this quarter will "be significantly lower" than the past quarter. "And as we plan for 2023, we’ll continue to make important trade-offs where needed, and are focused on moderating operating expense growth," Pichai said.
By the numbers:
- Meta ended the last quarter with 87,314 employees, an increase of 28% year-over-year.
- Microsoft had 221,000 employees, up 22.1% from a year ago.
- Alphabet reported 186,779 employees at the end of September, up 24% from the 150,028 workers it had a year earlier.
- Apple's headcount grew, but less substantially than those companies. As of Sept. 24, Apple had approximately 164,000 workers, up 6.5% from the prior year's 154,000.
- Amazon, too, showed more modest growth, ending the quarter with 1,544,000 workers, up 5% from the 1,468,000 people it employed a year ago.
What they're saying: Matt Perault, director of UNC’s Center on Technology Policy, told Axios that it's not just the employees hired in the last year, but also the large growth seen in the past few years.
- For example, he said, Meta has doubled in employee size between the end of 2018 and the end of 2021."It’s not clear to me that the hiring has resulted in increased impact or innovation at a pace commensurate with the increased costs," Perault said.
- "I would imagine that the companies can impose some headcount cuts without seeing a meaningful negative impact on their productivity."
Between the lines: In some cases, those growth numbers include acquisitions, such as Google's acquisition of Mandiant or Microsoft's purchase of Nuance, which also bring added revenue.
- However the numbers don't include temporary workers and contractors, which make up a significant proportion of Silicon Valley's overall workforce.
