Bell tolls for tech company perks
Free Ubers, gourmet lunches and private pods reserved for napping.
“This is a day in the life of someone working in tech,” says a Gen Z worker as she shows her TikTok viewers around her office. “We also have a barista at the office, so there’s yummy coffee for everyone and a dangerous amount of snacks.”
The video is just one of many to go viral for showing the lavish perks bestowed on tech workers.
Employees at companies such as Apple, LinkedIn, Microsoft and Meta have long enjoyed a raft of luxury benefits designed to retain talent. But with the threat of mass layoffs, there are now fears this cosy culture will soon come to an end.
Thousands of workers have been made redundant and many tens of thousands more are likely to follow as share prices dive at Silicon Valley’s biggest companies and they trim the fat.
“Winter is coming to the tech world and Silicon Valley is seeing layoffs across the board for the first time since 2008,” says Dan Ives, a Wall Street technology analyst at Wedbush Securities.
Recent financial results revealed just how deep the trouble runs in Silicon Valley. Meta’s shares plunged after a dismal set of numbers. Founder Mark Zuckerberg revealed revenue declined 4 per cent, but costs jumped 19 per cent to US$22b ($38b).
Meanwhile, Amazon projected the slowest holiday-quarter growth in the company’s history. Quarterly revenue grew by 15 per cent compared with the same period last year to US$127.1b. Net income declined by 9 per cent to US$2.9b.
“We’re taking actions to tighten our belt,” said Brian Olsavsky, its chief financial officer, adding that Amazon would pause hiring in some businesses.
Reality is starting to bite. The prospect of job cuts has plenty of Silicon Valley staff nervously awaiting their company all-hands meeting or Zoom call during which their team’s Slack channel is locked and their corporate email accounts frozen. Benefits are being cut, and hours worked are increasing. Data gathered by Layoffs.fyi estimates there have been 60,000 tech redundancies in the US so far this year.
Nowhere are fears of redundancies more pronounced than at social network Twitter. New owner Elon Musk has repeatedly criticised Twitter for what he sees as long-running failures by its staff and executives to tackle problems with its social network.
At Meta, staff are also facing the threat of cuts. In a letter to Zuckerberg, Brad Gerstner, chief executive of Altimeter Capital, which owns a US$340 million stake in the social media company, urged it to cut costs and staff numbers. “Meta needs to get fit and focused,” Gerstner wrote. To do this, he recommended cutting spending on its experimental metaverse technology by US$5b and reducing overall headcount by 20 per cent, more than 15,000 people.
“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” wrote Gerstner.
Some big tech companies are still recruiting aggressively. Google’s headcount grew from 150,028 last year to 186,779, according to its most recent results for the three months ending in September. Sundar Pichai, the chief executive, said it planned to slow hiring for the rest of the year. Google has, however, cut back on travel, enforcing a “business critical” only rule.
Meanwhile, Microsoft recently laid off 1000 staff, out of a total headcount of 220,000 and Snapchat laid off 20 per cent of its 6400 employees due to a slowdown in advertising technology.
The cuts are also affecting UK tech jobs. The deep layoffs at Snapchat saw the departure of staff from WaveOptics, a UK-based display technology company it acquired a little over a year ago for US$500m. Elsewhere, streaming company Dazn has cut engineering jobs in London. In Europe, German food delivery company Gorillas has made 300 people redundant. And Klarna, the buy now, pay later company, reduced headcount by 10 per cent.
Steve Sarracino, founder of venture capital firm Activant Capital, which has US$2.5b under management, says big tech companies face a reckoning.
“They haven’t done [ job cuts] for so long,” he says. “Remember, we’ve had a 12-year run. There’s a lot of pushback on any type of cuts.
“Over the next three months, we’re going to see pretty deep cuts at a lot of the larger tech companies, and the justification is going to be that they’ve got a lot of big misses coming out.”
If financial results continue to disappoint, nap pods and long lunches will soon be a distant memory.