The technology exodus from San Francisco continued as e-commerce site Pinterest (NYSE:PINS) said it would abandon its lease there at the end of the month.
The decision to leave the building in a gentrified neighborhood near Mission Bay is in addition to a 4% workforce cut. It’s part of a growing trend by tech companies to cut staff and desert expensive office space.
Evolution in Action
The layoff trend is a sharp reversal from the last two years when about 480,000 jobs were created in IT.There were still over 128,000 open tech job postings in February, according to IT consultancy Janco Associates.
Layoffs.Fyi estimates over 158,000 tech workers have been let go so far this year. While layoffs in the tech centers of San Francisco and Seattle get the headlines, they’re happening everywhere.
Many companies, like Accenture (NYSE:ACN), are just cutting part of last year’s additions. The consulting company, which now primarily rents and runs cloud servers for clients, will release 19,000 workers over the next 18 months. But 25 acquisitions raised the company’s headcount by 39,000 in 2022.
Recruit Holdings (OTCMKTS:RCRRF), a Japanese company that owns job search sites, yesterday laid off 2,200 workers at Indeed, the jobs company it owns in Austin, Texas. That’s 15% of the workforce.
Microsoft (NASDAQ:MSFT) alone has cut 2,700 jobs this quarter. Meta Platforms (NASDAQ:META) has laid off 11,000 and plans to cut 10,000 more. In January, Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) cut 12,000 workers.
Analysts and reporters are praising the effort to “get lean.”
The good news is that, so far, most of the workers are being quickly absorbed by non-tech companies like John Deere (NYSE:DE), and by start-ups. Many of these start-ups are in regenerative AI, where the rise of ChatGPT and its competitors have created a hiring boom.
Pinterest Layoffs: What Happens Next?
The Pinterest layoffs are a recession signal. But past tech recessions were also the start of new booms in the areas of cloud and smartphones.
In this case, a generative AI boom is already underway.
On the date of publication, Dana Blankenhorn held long positions in MSFT and GOOGL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
