Big Tech Layoffs ahead of Recession

[audreyh1]

Maybe the detailed H-1B visa discussion can be moved to another thread?

[Vincenzo Corleone]

Quote:

Originally Posted by audreyh1 Maybe the detailed H-1B visa discussion can be moved to another thread?

Yes, I hope so. I apologize for the hijack. I have strong opinions about it and sometimes can't help myself. Won't happen again.

[ExFlyBoy5]

Quote:

Originally Posted by Aerides Tech layoffs don't necessarily precede a recession. I don't see that they have to be related. Tech has always had its own ups and downs, as the pendulum always seems to swing too far each way, every time, time and again. And the numbers of these layoffs won't really impact the overall unemployment stats. Many of them will be Visa workers who will either quickly find new roles/sponsorship, or leave the country. Others will also find soft landings, join startups. Sounds more like most of them are correcting to new forecasting.

Well how about our local behemoth Paycom? HUGE company that deals with payroll. While they haven't announced layoffs as of yet, management is attempting to pull in a lot of people "back into the office" even when they were hiring folks and telling them WFH was permanent as recently as a few weeks ago. Lots of folks see the writing on the wall...a good way to get employees to leave without having terminate them. Sure, it's anectotal but in my mind one more indicator that a recessission is quite likely coming down the pike sooner than later.

[tulak]

An article in the Atlantic, “What the Tech and Media Layoffs Are Really Telling Us About the Economy.”

It might be behind a paywall. I read it in Apple News, for those that have a subscription.

https://www.theatlantic.com/newslett...conomy/672791/

They have a few theories on why this is happening. My favorite:

Quote:

The final explanation is that chief executives are normal people who navigate uncertainty by copying behavior. We can’t rule out the possibility that five-digit tech layoffs are essentially acts of mimicry or social contagion among competitors. When all of your competitors are laying off 10 percent of their staff—and being rewarded by the market for it!—culling 10 percent of your workers may seem like the right or inevitable thing.

Personally, I suspect inflation and increase in interest rates was the starting trigger, aka, macroeconomic conditions. Since (some) companies over-hired, they are now proactively writing off or downsizing unprofitable business units.

[rodi]

I worked as an engineer for a fortune 100 company. Their policy was annual layoffs. It was easier to get rid of employees than firing them for cause. It happened so regularly that we called it October-fest. They were somewhat hesitant about H1B holders caused a stink because she was going to be deported - they negotiated to keep her on the payroll for an extra 3 weeks till her new job started. But in general - it was easier to get rid of problematic employees through layoffs because there was less risk of a lawsuit for ageism, discrimination, whatever.

I don't think tech layoffs are indicative of the broader labor market because a lot of big companies do what my company did - hire like crazy, then layoff the ones that don't work out.

[JoeWras]

WSJ article:

Quote:

You’ve Heard of Quiet Quitting. Now Companies Are Quiet Cutting. Layoffs are down, but employers are still finding ways to cut jobs

Free link: https://www.wsj.com/lifestyle/career...hare_permalink

The Megacorp I retired from was master at quiet cutting. Always making sure to get under the WARN numbers. They've been at it for 20 years. From what I heard, the last year has been brutal with round after round of quiet cutting. Nothing makes the news. No reports to the Feds. Just a lot of small cuts.

Sorry kids, the party is over.

[brett]

I spent my career in the IT industry.

The megacorp that I worked for for twenty five years was in downsizing mode/change for the last 18 of those years.

I retired in 2011 and that megacorp was downsizing during each of those years since retirement.

Laying people off, increasing management scope, hiring new talent.

This is an industry that was, and still is, changing. With change comes layoffs and a renewal of certain skills and talent.

Some of it had to do with the economy, much of it was simply about the changing nature of the business and the reduction in margins.

[Aerides]

Quote:

Originally Posted by JoeWras Sorry kids, the party is over.

For every article there is a different take, this piece just a couple of days ago calling the larger tech layoffs as being in the rear-view mirror.

https://www.axios.com/2023/08/23/tech-layoffs-over-jobs

"The share of higher-income people who reported losing their job in the past two months has come back down, after spiking during the first half of the year."

The overall unemployment rate remains under 4%, so it will take a lot of noise in layoff in a lot of sectors to make a real impact to the larger economy. My Mega did layoffs annually, after 2008 it was pretty much part of the plan.

[JoeWras]

Quote:

Originally Posted by Aerides For every article there is a different take, this piece just a couple of days ago calling the larger tech layoffs as being in the rear-view mirror.

That was the point of the article. Big layoffs over, small quiet layoffs continue.

I don't think tech is dead. It has just reverted to normal. The party is over, time to get to work. Doesn't mean work has evaporated.

I partied in 1999 and thought I was king of the freakin' world until I got slapped silly by the tech crash. Talk about a wake up call and bad hangover... We were demanding -- and getting -- all kinds of goodies from Megacorp in 1999. And then we weren't. What a headache.

Just like now, we didn't lose our jobs right away. It took a few years, and then the small cuts started, and the off shoring, and so on. One very long hangover.

[brett]

Quote:

Originally Posted by JoeWras That was the point of the article. Big layoffs over, small quiet layoffs continue. I don't think tech is dead. It has just reverted to normal. The party is over, time to get to work. Doesn't mean work has evaporated. I partied in 1999 and thought I was king of the freakin' world until I got slapped silly by the tech crash. Talk about a wake up call and bad hangover... We were demanding -- and getting -- all kinds of goodies from Megacorp in 1999. And then we weren't. What a headache. Just like now, we didn't lose our jobs right away. It took a few years, and then the small cuts started, and the off shoring, and so on. One very long hangover.

Ditto. The megacorp that I worked for offered a buyout, DB-DC, for employees willing to switch. In 1999/2000. Many of my colleagues switched under the premise that self administered DC plans investing in the tech sector were bound to outperform a DB. Could not miss. Some were grandfathered and made the move, others were essentially forced to move to DC.

Numerous colleagues that did so subsequently had their DC balances slaughtered. Some by 55-60 percent. After that they compounded the mistake of a full tech focus by moving to fixed investment just prior to the market recovery. Megocorps DB plan went down to 75 percent funded....they pumped millions in over a few years to bring it back to 100 percent funded on both an ongoing and a windup basis.

I learned from this. Years later, 1n 2010/2011 close to retirement I started to exercise stock options. I was told by some of the same colleagues who lost their shirt years earlier that I was foolish. The stock, in the high forties/early fifties was going to $75. Did I want to be a chump and miss out on this?

Reality was that I needed to protect my retirement so I slowly cashed out. It took time because I was restricted in terms of when in a quarter I could sell and my plan was to do it gradually. But I did. Afterward the stock went underwater to $15, not the $75 that the daydreamers imagined. Lots of tears in their beer glasses and martinis.

My point is that some people who were industry veterans and who knew better continued to drink the industry and the employer kool-aid despite being burned in the past.

I never could understand that. Greed perhaps, false optimism. I do not know. Still don't. A few of them are still working or are 'consulting' 12 years later.

[Route246]

I think most people outside of the tech bubble generalize and don't understand what is really happening. I have been through years of annual and semi-annual layoffs in previous companies. It was like clockwork and had little or nothing to do with financial health, but it always had to do with manipulating the sentiment of the stock for a given quarter. This strategy is well-vetted by finance people vs engineering people. It is an acceptable means to meet financial goals of cost cutting and engineering goals of jettisoning staff with insufficient ROI (i.e. deadweight, over-priced packages, etc.). Please note that this NEVER has to do with impending financial bankruptcy or overall health of the industry. NEVER. Those are handled by WARN disclosures and even those are not always an indicator of ill health.

Quote:

Originally Posted by rodi I worked as an engineer for a fortune 100 company. Their policy was annual layoffs. It was easier to get rid of employees than firing them for cause. It happened so regularly that we called it October-fest. They were somewhat hesitant about H1B holders caused a stink because she was going to be deported - they negotiated to keep her on the payroll for an extra 3 weeks till her new job started. But in general - it was easier to get rid of problematic employees through layoffs because there was less risk of a lawsuit for ageism, discrimination, whatever. I don't think tech layoffs are indicative of the broader labor market because a lot of big companies do what my company did - hire like crazy, then layoff the ones that don't work out.

Quiet cutting avoids WARN notices. WARN notices required much 'splaining by management and they don't like that.

Quote:

Originally Posted by JoeWras WSJ article: Free link: https://www.wsj.com/lifestyle/career...hare_permalink The Megacorp I retired from was master at quiet cutting. Always making sure to get under the WARN numbers. They've been at it for 20 years. From what I heard, the last year has been brutal with round after round of quiet cutting. Nothing makes the news. No reports to the Feds. Just a lot of small cuts. Sorry kids, the party is over.

Turnover is a way of life. You need to get rid of deadweight. That is a fact of life.

Quote:

Originally Posted by brett I spent my career in the IT industry. The megacorp that I worked for for twenty five years was in downsizing mode/change for the last 18 of those years. I retired in 2011 and that megacorp was downsizing during each of those years since retirement. Laying people off, increasing management scope, hiring new talent. This is an industry that was, and still is, changing. With change comes layoffs and a renewal of certain skills and talent. Some of it had to do with the economy, much of it was simply about the changing nature of the business and the reduction in margins.

Those of us who have been on the inside can see how this is normalcy and not a symptom of some "underlying problem with tech" which is just clickbait.

Quote:

Originally Posted by JoeWras That was the point of the article. Big layoffs over, small quiet layoffs continue. I don't think tech is dead. It has just reverted to normal. The party is over, time to get to work. Doesn't mean work has evaporated. I partied in 1999 and thought I was king of the freakin' world until I got slapped silly by the tech crash. Talk about a wake up call and bad hangover... We were demanding -- and getting -- all kinds of goodies from Megacorp in 1999. And then we weren't. What a headache. Just like now, we didn't lose our jobs right away. It took a few years, and then the small cuts started, and the off shoring, and so on. One very long hangover.

I think a lot of this is insider bias. Unfortunately, that bias is victimized by quarterly comms meetings that resemble religious revivals in some companies. You were smart to go with your instincts and slowly cash out. An old manager I highly respect told me he used the 1/3 system. He always tried to sell out 1/3 of his position on a schedule, perhaps every 6 months. By using this approach he always got something out if it tanked and always had sufficient in if it took off. A form of reverse dollar cost averaging I guess.

Quote:

Originally Posted by brett Ditto. The megacorp that I worked for offered a buyout, DB-DC, for employees willing to switch. In 1999/2000. Many of my colleagues switched under the premise that self administered DC plans investing in the tech sector were bound to outperform a DB. Could not miss. Some were grandfathered and made the move, others were essentially forced to move to DC. Numerous colleagues that did so subsequently had their DC balances slaughtered. Some by 55-60 percent. After that they compounded the mistake of a full tech focus by moving to fixed investment just prior to the market recovery. Megocorps DB plan went down to 75 percent funded....they pumped millions in over a few years to bring it back to 100 percent funded on both an ongoing and a windup basis. I learned from this. Years later, 1n 2010/2011 close to retirement I started to exercise stock options. I was told by some of the same colleagues who lost their shirt years earlier that I was foolish. The stock, in the high forties/early fifties was going to $75. Did I want to be a chump and miss out on this? Reality was that I needed to protect my retirement so I slowly cashed out. It took time because I was restricted in terms of when in a quarter I could sell and my plan was to do it gradually. But I did. Afterward the stock went underwater to $15, not the $75 that the daydreamers imagined. Lots of tears in their beer glasses and martinis. My point is that some people who were industry veterans and who knew better continued to drink the industry and the employer kool-aid despite being burned in the past. I never could understand that. Greed perhaps, false optimism. I do not know. Still don't. A few of them are still working or are 'consulting' 12 years later.

[badatmath]

My old job that laid me off this spring now has more workers doing it than when I was there. . . mostly overseas though so cheaper.

[JoeWras]

I wish every one of these periodic quiet cuts was all about "deadweight."

It isn't.

[Ronstar]

^^ we had a business consultant who recommended firing 10% of the workforce annually. Good times and bad, in an effort to get rid of dead weight. Problem was that 10% would sometimes exceed dead weight, and given the amount of work that it took to find and hire people, we didn’t heed the consultant’s advice.

[tulak]

Quote:

Originally Posted by Ronstar ^^ we had a business consultant who recommended firing 10% of the workforce annually. Good times and bad, in an effort to get rid of dead weight. Problem was that 10% would sometimes exceed dead weight, and given the amount of work that it took to find and hire people, we didn’t heed the consultant’s advice.

Ah, the GE model. You should be able to churn the bottom 10% of your work force, or at least treat them poorly.

There are many problems with that model.

The other side is you should treat your top 20% with outsized rewards. Suddenly you’ve created an environment where it’s more important to show your worth than perform to the benefit of the business.

[Chuckanut]

I worked for a small growing company that was having some short term profit issues. But, the company realized that keeping its staff was important since they anticipated a return to normal in a year or so. They were also afraid that layoffs would trigger an exodus of many of the best people who would not wait around to see if they survived. So each manager had to notify the bottom 10% that if there were layoffs, they would be the ones to go. Enough of those 10% left that nobody was ever fired.

[Route246]

This is a problem when quiet layoffs happen on a schedule. Eventually, you keep shaving the bottom 5% and then you run short of workers. At that point you go after middle managers which requires fewer layoffs to achieve your financial goals. At some point after doing this for years or decades you end up with a lean workforce. At that point, innocent producers are axed which is tragic and self-destructive for the firm.

In parallel, you have middle and lower management who becomes quite adept at creating their lists. This leads to more politicalization which in itself is extremely destructive. Sycophants can really prosper and survive in this environment. I watched it happen and was appalled by it all but that is the way things worked.

Quote:

Originally Posted by JoeWras I wish every one of these periodic quiet cuts was all about "deadweight." It isn't.

[JoeWras]

It was one of the top 3 reasons I retired. It was so disruptive. I also can't think of a better form of legal psychological torture.

[eytonxav]

Quote:

Originally Posted by Route246 I think most people outside of the tech bubble generalize and don't understand what is really happening. I have been through years of annual and semi-annual layoffs in previous companies. It was like clockwork and had little or nothing to do with financial health, but it always had to do with manipulating the sentiment of the stock for a given quarter. This strategy is well-vetted by finance people vs engineering people. It is an acceptable means to meet financial goals of cost cutting and engineering goals of jettisoning staff with insufficient ROI (i.e. deadweight, over-priced packages, etc.). Please note that this NEVER has to do with impending financial bankruptcy or overall health of the industry. NEVER. Those are handled by WARN disclosures and even those are not always an indicator of ill health. Quiet cutting avoids WARN notices. WARN notices required much 'splaining by management and they don't like that. Turnover is a way of life. You need to get rid of deadweight. That is a fact of life. Those of us who have been on the inside can see how this is normalcy and not a symptom of some "underlying problem with tech" which is just clickbait. I think a lot of this is insider bias. Unfortunately, that bias is victimized by quarterly comms meetings that resemble religious revivals in some companies. You were smart to go with your instincts and slowly cash out. An old manager I highly respect told me he used the 1/3 system. He always tried to sell out 1/3 of his position on a schedule, perhaps every 6 months. By using this approach he always got something out if it tanked and always had sufficient in if it took off. A form of reverse dollar cost averaging I guess.

When a high level executive has their incentive plan compensation tied to stock price funny things can happen. I've seen a lot fudging of EIP goals of various types over the years.

[Surewhitey]

Quote:

Originally Posted by tulak The other side is you should treat your top 20% with outsized rewards. Suddenly you’ve created an environment where it’s more important to show your worth than perform to the benefit of the business.

This is my wife's experience. They keep throwing dough (bonus, profit sharing & RSU's) and time (she's "working" half days in Mexico this week & Europe a few months ago and her boss is very aware)... Why she doesn't want to talk about ER.