For most employees, few words spark more fear than "layoffs."
Common during recessions and other times of trouble, layoffs describe mass employment terminations at individual companies.
For example, in 2023, layoffs were common as big tech companies like Meta Platforms (META +1.77%), Amazon (AMZN +1.12%), Alphabet (GOOG +3.40%)(GOOGL +3.42%), and Microsoft (MSFT +1.76%) all let go of thousands of employees in an effort to cut costs after the pandemic boom in the tech sector faded.
With a challenging macroeconomic environment in other sectors like entertainment, layoffs have also affected other parts of the economy.
What are layoffs, exactly?
Layoffs are a shorthand term to refer to corporate job terminations. They are typically mass firings, cutting hundreds or thousands of jobs and, unlike individual firings or terminations, done with little regard for an individual employee's performance. Companies need to cut costs, and layoffs are often the easiest way to do so.
Corporations will refer to layoffs as employment terminations, separations, workforce reductions, or even job cuts, but those terms all mean the same thing.
It means that employees are losing their jobs, and companies are cutting them, typically because the business is underperforming and it needs to shift its strategy in a new direction.
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One recent example of layoffs
Among the tech companies that have announced layoffs is Alphabet, the parent of Google.
In January 2023, the company reported it was laying off 12,000 employees. The move came after some of its closest competitors, like Meta Platforms and Microsoft, announced similar layoffs and also followed calls from activist investor TCI Fund Management to cut headcount and salary. The news also came after the launch of ChatGPT, signaling a new race in artificial intelligence.
In a blog post announcing the move, CEO Sundar Pichai said the company "hired for a different economic reality than the one we face today," an acknowledgment that growth had slowed down and that AI was becoming preeminent.
Pichai also said the company was focused on ensuring its "people and roles are aligned with our highest priorities as a company. The roles we're eliminating reflect the outcome of that review."
In other words, the layoffs reflected a shift in strategy to focus on AI.
That shows that it's important to go beneath the surface to find the motive behind the layoffs because they are often specific to each case.
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