Some tech firms hit the pause button on hiring

Though the job market remains tight, several large tech companies, including Salesforce, Twitter and Meta, have slowed the hiring of new staff amid rising inflation and market uncertainty; other companies have decided to cut jobs entirely.

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Salesforce is apparently the latest firm to hit the brakes on recruitment as reports of hiring freezes and layoffs affecting tech workers ramp up. Twitter, Meta, and Uber are among the companies that have slowed hiring for a variety of reasons in recent weeks, amid rising inflation and an on-going stock market sell-off.

“Since the onset of the pandemic, organizations have accelerated their digital transformations to support new ways of working and reaching customers,” said Jamie Kohn, research director at Gartner’s HR practice. “Tech companies have been at the center of it all. Now, they’re taking a step back to re-evaluate what they need for future growth. Therefore, these freezes are most likely short-term pauses.”

The freezes at large tech companies contrast with the broader recruitment environment for tech workers, with an ongoing shortage of talent.

“Outside the tech industry, the demand for tech roles is still pretty high,” said Kohn. “A lot of companies are still struggling to recruit the talent they need to support their growing tech needs. Tech workers are still going to have a lot of options on the job market, even if they’re not in major tech companies.”

Cloud software vendor Salesforce will put recruitment on hold for certain open roles in an effort to control expenses, according to an internal memo seen by Business Insider. Some corporate travel and company offsites will also be cancelled, according to the report on Wednesday. (In a statement, Salesforce said still plans to hire 4,000 workers this quarter.)

Meta, which owns Facebook, also plans to pause new hires for some engineering roles, according to The Verge, which obtained a recording of an internal all-hands meeting at the company. The hiring freeze follows a decision to reduce spending in certain areas at the start of the COVID-19 pandemic, including building video and audio calling features to rival Zoom and new shopping features.

The company previously told staff of its intent to pause hiring across its engineering division for the rest of 2022, according to a company memo seen by Business Insider earlier this month. Meta CFO David Wehner cited an “industry-wide” downturn as one reason for the decision, alongside the invasion of Ukraine and data-privacy changes.

Details of a hiring freeze at Twitter also emerged last week, as the social media company prepares for a $44 billion takeover by Elon Musk, though layoffs are not currently planned, according to an internal company email seen by The Verge. The company has also fired senior execs Kayvon Beykpour, formerly consumer product leader, and Bruce Falck, head of revenue. Musk is said to have proposed initial job cuts in his pitch to raise funds for acquiring the company, before increasing headcount in subsequent years.

And on Tuesday, Coinbase, a cryptocurrency exchange platform, announced it will backtrack on plans to hire aggressively this year due to the recent market downturn.

“Heading into this year, we planned to triple the size of the company,” Emilie Choi, Coinbase’s president and COO, said in a blog post. “Given current market conditions, we feel it’s prudent to slow hiring and reassess our headcount needs against our highest-priority business goals.”

Uber CEO Dara Khosrowshahi has also informed staff of plans to cut spending and treat hiring as a “privilege and be deliberate about when and where we add headcount,” according to an email seen by CNBC last week. Khosrowshahi cited a “seismic shift” in market conditions.

While the reasons for slowed hiring vary from firm to firm, many are being cautious in light of macro-economic conditions and predictions of a recession later this year, said Jack Gold, founder and principal analyst at J. Gold Associates, LLC.

“Since these are public companies, they have to play the, ‘How did I do this quarter’ game, and stockholders look very closely at expenses when sales may not be growing. So that is a big piece of the hiring pause/reduction situation,” he said.

At the same time, he said, many large tech companies have onboarded significant numbers of new employees in the past year or two during the pandemic as “sales grew and the market was hot.

“So it’s not surprising they may be in a slowdown of hiring to be able to fully absorb the new employees into the organization,” he said. “It does take six to 12 months for new employees to become fully productive in new jobs.”

Other tech industry companies have gone further and decided to cut jobs. Against a backdrop of falling subscriber numbers, Netflix is laying off 150 employees, amounting to 2% of its U.S. workforce, as well as 70 part-time roles, according to Variety.

Online trading platform Robinhood laid off 10% of its workforce in April, while collaboration software vendor Mural and online car dealership Carvana, are among others that have lowered headcount recently. More than 80 tech firms have laid off staffers since the beginning of the year, according to layoff tracker site

Copyright © 2022 IDG Communications, Inc.

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