the tech giant HP joined the wave of layoffs in the technology sector last week, with other giants bigtech who announce massive cuts in their workforce.
HP announced that it will lay off 6,000 workers in the coming months, equivalent to 10 percent of its total workforce, as part of a restructuring to improve its financial position and stop the deterioration of its finances due to the collapse in computer sales.
The company expects that only this year there will be a drop of 10% of personal computers (PCs), which will undoubtedly have an impact on revenue from the outset, and of course it will affect other areas of the company.
HP announced that it will dedicate around 1,000 million dollars in a restructuring process that will allow it to save around 1,400 million dollars annually from the year 2025 onwards.
But HP’s announcement is just one of many that have occurred in the technology sector, it is a crisis triggered by nothing more and nothing less than a boom, what we see today is an accelerated process that is rarely observed.
In addition, subject to what happens in the coming weeks, we are about to witness in 2022 the worst year for the technology sector since the dotcom collapse at the beginning of this century.
Layoffs in the technology sector: The great adjustment
In the period of the pandemic, with the great confinements throughout the world, the technology sector was decisive in maintaining communications and a series of activities that became essential (payments, entertainment, online shopping, remote work, etc.).
This boom boosted the technology sector in general, the market registered an unexpected boom for which even some companies were not prepared and for this reason they massively increased their operational structure, hiring specialized workers.
This boom was not ephemeral, but neither was it as lasting as expected. Many projects were interrupted and others “shrinked” again, adjusting to the new conditions.
Thus, after the “Great Expansion” of the market, with the aforementioned characteristics, we arrived at what we are experiencing today: “The great adjustment”.
The data is compelling and leaves no doubt that the technology sector is experiencing a period of adjustment.
Meta, Twitter, Netflix…
In addition to HP’s announcement to cut 6,000 jobs, the one recently made by Meta (Facebook) is recalled in the sense of cutting 11,000 jobs, equivalent to 13 percent of its total workforce; Twitter is another company that did the same and officially cut (apparently more workers have left) 50 percent of its workforce, around 3,700 workers.
The wave of layoffs has not stopped. Amazon announced the cut of 10,000 employees, which is equivalent to 3 percent of its total workforce; Snap it will lose 20 percent of the total number of workers by laying off 1,000 of them; For its part, Netflix will cut 500 jobs and some others that are not fully technological, but linked to said market they will also cut employees, such as Lyft, the mobility platform that has announced the layoff of 700 employees.
The cut in workers is not exclusive to technology broadcasters, but it does reflect the conditions in which these corporations find themselves. It is a reflection of the so-called “technological winter”, paradoxically today that the world depends more and more on technology. This is perhaps the factor that should be analyzed in more detail.
The elevator played a key role
In the stock markets there is a saying that states the following: “the rises of the market arrive by the stairs and the falls always leave by the elevator“Refers to the fact that increases in stock prices are generally slower and falls are usually more dizzying.
But the pandemic changed the conditions, the increases in share prices came from the elevator, they were greatly accelerated by the circumstances of the pandemic and confinement.
The great bet was that this phenomenon would consolidate and that the technology sector would remain at those levels, the reality is that two years later the sector maintains its relevance, but prices fell by the elevator because conditions also changed in the same way in which they appeared.
By Antonio Sandoval
High level Alto Nivel is the Mexican medium with more than 30 years of stories, content and news on the economy, finance, business and leaders.