Another year is about to pass again, and all of us can say that 2023 was definitely a rollercoaster ride.
This year, lingering economic challenges led to widespread layoffs, impacting various industries. Major companies, including Amazon (NASDAQ:AMZN) and Salesforce (NYSE:CRM), initiated substantial job cuts, reminiscent of the significant layoffs observed in 2022 when over 120 large U.S. companies downsized, affecting about 125,000 employees. Tech firms bore the brunt, but startups, banks, manufacturers and online platforms were also affected.
Now that 2023 is almost over, let’s go back and wrap up some prominent companies that made a significant amount of job cuts and which ones are still planning to do one last chop in Q4.
Wall Street Cutting Jobs
Major U.S. banks quietly trimmed 20,000 jobs in 2023, with more expected, reflecting broader economic challenges. Federal Reserve actions, responding to inflation, contributed to the job cuts, and Chair Jerome Powell acknowledged the anticipated impact on Americans.
The decline in market activity has affected investment banking, dealmaking, IPOs, mergers, acquisitions, trading and asset management. Accordingly, it should be little surprise that significant layoffs on Wall Street are taking place this year.
Facing expectations of prolonged slower growth, higher interest rates and recession fears, financial services firms are cutting jobs. The shift towards artificial intelligence (AI), automation and emerging technologies aims to enhance efficiency and reduce costs, rendering certain roles redundant. Investment banks, under heightened regulatory scrutiny, incur increased compliance costs, impacting hiring practices amid the changing financial landscape.
In the second quarter of 2023, the Wall Street giant Morgan Stanley (NYSE:MS) had intentions to reduce its workforce by approximately 3,000 employees, as reported by Reuters in May. That followed a prior layoff of around 1,600 employees in December 2022.
Another Wall Street favorite that made job cuts is Citigroup (NYSE:C). In November 2022, Citibank cut several positions within its investment banking division due to a downturn in dealmaking, as reported by Bloomberg News.
In the early part of this year, Capital One (NYSE:COF) cut about 1,100 positions in its technology department, while around the same period, Goldman Sachs (NYSE:GS) initiated layoffs affecting up to 3,200 white-collar employees.
BlackRock (NYSE:BLK), a major global asset manager, announced the elimination of approximately 500 roles. Coinbase (NASDAQ:COIN), a publicly traded cryptocurrency exchange, executed its third round of layoffs, affecting 950 positions within a year.
Bank of New York Mellon (NYSE:BK), one of the oldest U.S. financial institutions, reduced its workforce by about 3%, equating to around 1,500 jobs.
Salesforce
In early 2023, Salesforce initiated layoffs, letting go of approximately 8,000 employees, constituting about 10% of its total workforce. The decision followed the industry practice of avoiding holiday terminations, acknowledging a correction for rapid pandemic-driven hiring. Internal feedback indicated dissatisfaction, citing poor handling and lack of clarity during the layoffs.
CEO Marc Benioff acknowledged responsibility, stating, “As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing.” Benioff also noted reduced productivity among remote workers, emphasizing that newer hires, in particular, exhibited lower efficiency.
However, after a January workforce reduction of 10%, Salesforce is set to hire more than 3,000 employees, focusing on sales, engineering and data cloud product teams. CEO Marc Benioff emphasizes growth and aims to expand the AI business for increased investments.
Chief Operating Officer Brian Millham expressed the intent to boost successful business segments, emphasizing a surge in those areas.
Amazon
In January, Amazon experienced its largest job cuts, releasing 18,000 employees, part of a broader trend in the tech industry. Influenced by economic shifts and strategic decisions, the layoffs impacted both corporate and warehouse positions. Amazon also imposed hiring freezes amid these workforce changes.
The company attributed the premature disclosure to a staff leak. While mostly impacting corporate roles, hourly warehouse and delivery staff were minimally affected. The cutbacks, representing around 1% of Amazon’s massive 1.5 million workforce, were prompted by economic uncertainties and the rapid hiring pace of recent years.
In March, Amazon executed additional layoffs, affecting 9,000 employees, as part of ongoing cost-cutting measures. CEO Andy Jassy explained the delay in announcing these reductions, stating that teams needed time for thorough analyses before sharing the decisions with affected staff.
Additionally, Amazon’s Alexa division has laid off “several hundred” employees, including the artificial general intelligence team. Daniel Rausch, the VP of Alexa and Fire TV, cited a focus on generative AI and realignment with business priorities as reasons for the layoffs, impacting several hundred roles.
Amazon Games eliminated over 180 positions, shuttering the Crown Channel and Game Growth initiatives. The gaming division, led by VP Christoph Hartmann, prioritized Prime Gaming to enhance focus on high-potential growth areas.
LinkedIn implemented a second round of layoffs, affecting over 660 employees in engineering, product, talent and finance teams. This move, constituting more than 3% of the global workforce, follows the earlier elimination of 716 jobs in May, which included closing its Chinese app InCareer, as part of a broader restructuring within the Global Business Organization.
The company is shedding jobs as part of its broader strategy focused on optimizing AI. The move follows recent AI-driven product enhancements, such as AI-assisted candidate discovery for recruiters and AI-powered coaching for premium subscribers. While acknowledging the challenges, LinkedIn emphasizes its commitment to supporting affected employees through the transition.
Spotify
Spotify (NYSE:SPOT) is undertaking its third round of layoffs in 2023, cutting 17% of its global workforce. CEO Daniel Ek cited a “strategic reorientation” as the reason for the job cuts, acknowledging the company’s past significant investments in employees, content and marketing. Approximately 1,500 employees are affected.
Ek assured affected employees that HR would schedule individual meetings to discuss details. Severance pay, PTO payouts, continued healthcare coverage, immigration support and two months of outplacement services were outlined for departing employees. The CEO acknowledged the impact on the remaining team and emphasized a commitment to respectful and compassionate treatment.
Alphabet
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) reduced its news division workforce this week, cutting around 40 to 45 jobs, as reported by CNBC. This downsizing occurs amid heightened sensitivity for online platforms and publishers. A spokesperson from the Alphabet Workers Union confirmed the job losses, while an Alphabet spokesperson acknowledged the cuts without specifying the number, emphasizing that hundreds still work on the news product.
Alphabet’s spokesperson recently stated, “We’re deeply committed to a vibrant information ecosystem, and news is a part of that long-term investment.” Internal changes were made, impacting a small number of employees who are being supported with a transition period, outplacement services and severance as they explore new opportunities.
The layoffs in Google News, a platform providing links to articles from various publishers, occurred amid global events, including the Israel-Hamas conflict and the Russia-Ukraine war, highlighting the importance of reliable news sources.
Senator Michael Bennet (D-CO) sought information on measures taken by various social media platforms and Google to combat the spread of false content related to the Israel-Hamas conflict. European Union industry chief Thierry Breton urged stricter actions against disinformation, directing letters to Google and YouTube CEOs. Google stated that internal changes in Google News won’t impact its work on “misinformation and information quality.”
Some tech companies increased content moderation to address misinformation. Canada and other countries are considering laws aimed at making tech platforms compensate publishers. The Google News layoffs followed broader job cuts in the company earlier this year.
Are More Layoffs Coming in 2024?
A 2023 Randstad RiseSmart report revealed that 92% of employers are gearing up for layoffs in 2024 to address COVID-19’s economic impact and potential overstaffing. However, the rise of generative AI and sustainability practices hints at new job opportunities, emphasizing the importance of ongoing education and adaptability.
In my view, investors should take a breather. Most of these moves appear to be cosmetic right now and not the result of a steep weakening in the market. That said, this is a trend worth monitoring, and we’ll have to keep an eye on how job cuts persist into 2024 — or not.
On the date of publication, Chris MacDonald has a long position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
