PayPal, HubSpot And Workday Are The Latest To Announce Mass Layoffs

Key takeaways

• PayPal, HubSpot and Workday all announced on the same day combined job losses of over 3,000
• Mass tech layoffs are being cited as a response to a potential recession and overhiring during the pandemic
• Some are beginning to question whether this is a turning point for Big Tech’s reputation for high-paying roles with plenty of free perks

Tech workers can’t catch a break at the moment. The mass layoffs continue as PayPal, Hubspot and Workday all announced a cull to employee numbers on 31 January.

Unfortunately, it’s just another week in a long string of mass layoffs in Big Tech. The economic downturn has left no company in the sector unscathed, especially after the boom of the pandemic.

ADVERTISEMENT

If you’re looking for something to help secure your investments against tech volatility, you should take a look at our Portfolio Protection. Our AI technology analyses your portfolio for risks and applies its cutting-edge hedging strategies to help keep your investments safe.

Download Q.ai today for access to AI-powered investment strategies.

Where are the latest layoffs?

Here are this week’s major companies to shrink their workforce, all broadly citing a similar reason: the economic downturn.

ADVERTISEMENT

PayPal

Online payments giant PayPal is the biggest hitter so far this week, with 7% of the company losing their jobs. The estimate is 2,000 full-time workers will be impacted.

President and CEO Dan Schulman said in a statement “We must continue to change as our world, our customers, and our competitive landscape evolve” and that PayPal employees should show “compassion for each other”.

There were no further details on whether the job losses were due to over-hiring during the pandemic.

HubSpot

ADVERTISEMENT

Software company HubSpot also announced its intention to cut 7% of its total workforce, amounting to around 500 workers. CEO Tamini Rangan said in a company email that HubSpot had “experienced a faster deceleration than we expected” and tweeted his appreciation for those laid off.

Rangan followed the Zuckerberg playbook, citing over-hiring at the start of the pandemic to handle a huge uptick in business. “The level of uncertainty in customer demand now tells us that we may have more challenging times ahead,” he continued.

Another step HubSpot is taking is to consolidate its office space throughout 2023 so it has “higher density” in its locations. This has been a challenge for many companies as offices sit empty while staff work from home.

ADVERTISEMENT

Workday

Cloud software company Workday plans on downsizing its global workforce by 3%, which comes to around 525 people. Co-CEOs Aneel Bhusri and Carl Eschenbach said in an email to all employees that “we continue to operate in a global economic environment that is challenging for companies of all sizes”.

In October last year, the company was estimated to have over 17,500 employees worldwide – a 15% increase from the previous year. Bhusri and Eschenbach were keen to stress in their post “these moves are not the result of over-hiring” and will continue to recruit throughout the year.

Are the tech layoffs slowing down?

Sadly, it doesn’t seem like we’re anywhere near done with mass job cuts in the tech industry.

ADVERTISEMENT

According to the tech layoffs tracker, six other companies announced they were reducing their workforce on the same day. That’s nine in total for just 31 January.

IBM was last week’s news with its announcement that 1.5% or 3,900 jobs would be culled. The computing conglomerate said the move was due to selling its healthcare data analytics branch and establishing its IT management business, Kyndryl, as its own company.

We’ve all heard about the largest cuts, too. Microsoft, Google, Amazon and Meta’s mega-rounds of job cuts total 51,000 alone. Some even think these Big Tech giants are just getting started with the layoffs, with Meta rumored to have its eye on the ‘middle manager’ types in the company.

ADVERTISEMENT

The grand total of laid-off employees in 2023 alone is approaching 83,000 – and we’re only just into the second month of the year.

Is Big Tech in trouble?

Most of the reason the layoffs are happening is that tech companies have had a bumper couple of years, leading many to think this is a course correction rather than a burst bubble.

Many tech companies experienced a boom in demand for their services once the pandemic hit and fundamentally shifted how we work today. By 2022 Amazon had doubled its corporate staff count from 2019, while Meta nearly doubled its headcount in two years. CEO of Meta, Mark Zuckerberg, alluded to trimming the fat in his layoffs announcement.

Not only this, but the sector is still actively recruiting. CompTIA analysis revealed that in December, tech companies added 17,600 workers to their rosters, marking the 25th month in a row for net employment growth.

ADVERTISEMENT

Out of the 246,000 job postings still live in the sector, nearly a third were for software developers and engineers. Chief research officer Tim Herbert noted, “Despite the layoffs there continues to be more employers hiring tech talent than shedding it.”

So, what’s the deal?

The cult of Big Tech’s ‘Icarus’ moment

Others have concluded these mass layoffs are the first step towards Big Tech losing its shine.

Top talent was drawn to these companies like a moth to a flame with oversized pay packets and office perks galore. Now the leaner times have arrived, the free dinners, massage therapists and on-demand sushi bars have had to go.

ADVERTISEMENT

Former Big Tech employees have despaired about how they found out they’ve been laid off. At Google, entire teams lost access to internal work systems before they’d even read the email saying they were fired.

Other workers said the layoffs were arbitrary and not based on performance. There’s nothing like being told your worth by Big Tech to leave workers with a sense of injustice.

A lot of these laid-off workers have decided to start their own businesses. According to the EIG, almost 1.7m start-ups filed for business last year, nearly a 28% increase from the pre-pandemic baseline. That’s good for entrepreneurism in the US and bad for Big Tech’s ‘hustle culture’.

The combination of fewer perks and their callous handling of layoffs may leave Big Tech struggling to recruit. They’re looking suspiciously like any other corporate desk job – but with the same high expectations of employees.

ADVERTISEMENT

We could see another boom in hiring once the economic downturn has subsided, but those affected won’t be quick to forget how Big Tech treated them.

The bottom line

The likelihood is that the tech industry is probably down, but not out. There’s too much money continuing to be made in the sector for it to be in a downturn for long, but that doesn’t mean there aren’t likely to be new disruptors and changes in the pecking order.

Staying on top of all this can be challenging for investors, particularly given how fast the industry moves.

Instead of trying to do it all yourself, why not enlist the help of AI to do the heavy lifting for you?

ADVERTISEMENT

Our Emerging Tech Kit uses AI to predict the performance of a range of different assets within the tech sector, including tech ETFs, large cap tech stocks, growth tech stocks and cryptocurrencies via public trusts. Each week it then automatically rebalances the Kit in line with these projections.

If you want to invest in tech but you’re not sure which sectors are likely to pop, AI can be a powerful weapon in your corner.