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For certain companies, the pandemic fostered a hiring boom. Last year, however, economic conditions became less fortuitous for many of them, resulting in a resounding bust that’s spilling into the early days of 2023. Already this year, 104 tech companies have laid off over 26,000 employees, according to Layoffs.fyi.
When much of the in-person world ground to a halt during pandemic lockdowns, digital goods and services were in high demand, allowing tech companies such as Peloton, Meta, Amazon, and Stripe to drastically bolster their rank and file while many other businesses languished. As HR Brew reported in December, the practice was underscored by a “blitzscaling” philosophy that prioritized rapid growth, often on the personnel side of a business, to outmuscle the competition.
In 2023, we’ve already seen companies attributing layoffs to aggressive hiring practices over the last few years.
Salesforce. CEO Marc Benioff said of the company’s move to reduce headcount by around 7,000 employees earlier this month: “As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that.”
Crypto.com. The crypto exchange enacted layoffs last week, axing around 20% of its staff, or around 700–900 employees, according to CoinDesk. In a statement regarding the force reduction, co-founder and CEO Kris Marszalek wrote: “We grew ambitiously at the start of 2022, building on our incredible momentum and aligning with the trajectory of the broader industry. That trajectory changed rapidly with a confluence of negative economic developments.”
Amazon. The e-commerce giant announced that it was slashing 18,000 jobs from its corporate workforce this month. The move to eliminate the roles was explained by CEO Andy Jassy in a statement: “This year’s review has been more difficult, given the uncertain economy and that we’ve hired rapidly over the last several years.”
Zoom out. Blitzscaling is about jockeying for position in a crowded marketplace, and ensuring that you win no matter the competition, Joshua White, a Vanderbilt University business professor, explained to HR Brew in December: “If you enter a new space or a new technology, whatever company becomes biggest the fastest—they’re going to have the most influence.” But the growth almost always comes with a cost, HR consultant Daniel Space countered: “I personally find hyper-growth modes to be very, very stressful without a lot of long-term success.”
With many experts predicting a recession this year, companies could be bracing for more of the same.—SB