News Highlights:
- The recent wave of tech layoffs: Many American technology companies have announced massive layoffs, which already crossed more than 1,50,000 employees in 2022 and over 40,000 in January year alone.
- Technology giants Alphabet, Amazon, Meta, and Microsoft have announced the slashing of thousands from their workforce in the last couple of months.
Lay-Off:
- About:
- A layoff is the temporary or permanent termination of employment by an employer for reasons unrelated to the employee’s performance.
- Employees may be laid off when companies aim to cut costs due to a decline in demand for their products or services, seasonal closure, or during an economic downturn.
- In the USA, employees lose all wages and company benefits when laid off but qualify for unemployment insurance or compensation..
- Laid-off employees often do not lose their investment in company retirement plans and may be entitled to a severance package.
- Recent triggers of Lay-Off:
- Pandemic Boom
- Overhiring during pandemic
- Fear of recession
- Russia-Ukraine War
- Inflation
Common reasons why employees are laid off:
- Cost reduction:
- One of the main reasons why workers get laid off is because the company decides to cut back on costs in some way.
- Cost-cutting is one of the main reasons for lay off because the companies are not making enough profits to cover their expenses or because they need substantial extra cash to pay off debt.
- Relocation:
- Moving the company’s operations from one area to another can also bring about the need to let go of some workers.
- Shutting down the initial location will affect the workers who get laid off and the surrounding community’s economy.
- Staffing redundancies:
- Layoffs also occur when a company needs to eliminate some positions due to overstaffing, outsourcing, or a modification to the roles.
- A company may want to eliminate redundant positions to make its operations more efficient.
- Merger or buyout:
- If a business is bought out or decides to merge with another, the change might lead to a change in the company’s leadership and corporate direction.
- If there’s new management, the chances are that they’ll come up with new goals and plans, which can lead to layoffs.
Effects of layoff on employees and employer:
- Effects on Employees:
- Employee layoffs can have devastating effects on both suspended or terminated employees and those who survived.
- Laid-off employees may exhibit shock, anger, distrust, doubt, frustration and escapism.
- Employee layoff, if not handled properly and carefully, may result in protests and disputes.
- Effects on the employer:
- Laying off employees can significantly negatively affect customer retention.
- Every customer is an asset to any company, and the employer must find ways to retain each.
- When a company lays off its employees, it sends out a message to customers that it is undergoing some sort of crisis.
Recent layoff:
- Meta:
- Facebook-owner Meta Platforms Inc. announced in November last year that it cut more than 11,000 jobs or 13% of its workforce.
- The mass layoffs were the first of their kind in Meta’s 18 years of operation.
- Microsoft:
- The Bill Gates-founded tech corporation headquartered in Washington announced that it would cut 10,000 jobs or less than 5% of its headcount by March 2023, taking a $1.2 billion charge to its earnings.
- Amazon:
- In early January, e-commerce, cloud computing, and streaming giant Amazon and America’s second-largest private employer after Walmart said it would cut 18,000 jobs or 6% of its workforce in company-wide layoffs.
- Google:
- Alphabet, the parent company of Google, said on January 20 in a staff memo by boss Sundar Pichai that it would be cutting 12,000 jobs or 6% of its workforce.
- Spotify:
- music streaming platform Spotify’s CEO Daniel Ek disclosed in an all-staff memo that the company would cut 6% of its global workforce, laying off approximately 600 people.
- Salesforce:
- San Francisco-headquartered tech company Salesforce announced on January 4 that it was cutting 10% of its jobs and closing some offices.
- Twitter:
- Following Tesla CEO Elon Musk’s $44 billion takeover, social media Company Twitter Inc. made aggressive job cuts, laying off half of its workforce or about 3,700 employees in various departments like communications, content curation, product, and engineering.
- Others:
- Networking and Collaboration solutions firm Cisco said in November that it would lay off 5% of its workforce as part of a restructuring.
- Computer maker HP also said it would cut up to 6,000 by the end of the fiscal year 2025.
Do they affect Indian professionals?
- As per some industry insiders, between 30% to 40% of those laid off are Indian IT professionals, a significant number of whom are on H-1B and L1 visas.
- The H-1B visa is a non-immigrant visa that allows U.S. companies to employ foreign workers in special occupations that require theoretical or technical expertise.
- Technology companies depend on it to hire tens of thousands of employees each year from countries like India and China.
- A sizeable number of them are now scrambling for options to stay in the U.S. to find a new job in the stipulated few months that they get under these foreign work visas after losing their jobs.
Way Forward:
- Voluntary retirement programs, cutting back on the extras, Offer more unpaid time off are some of the alternatives to reduce the layoff stress on employers.
- Companies should focus on ethical issues by involving and balancing the interests of the two essential stakeholders – investors and employees, Corporate governance and business ethics, responsibility, empathy etc.
Pic Courtesy: Freepik
Content Source: The Hindu