They had already stopped hiring, cut business trips – which is what you do to save money when things aren’t going that way anymore. But now it’s all about the staff at the computer manufacturer Dell, and not too tight: the PC manufacturer is cutting about 6,650 jobs, according to the news agency Bloomberg reported. That corresponds to about five percent of the workforce.
Another US technology company is reacting to a possible recession with layoffs. The industry environment is deteriorating noticeably, quoted Bloomberg from a circular from Jeff Clarke, Dell’s day-to-day co-CEO. The previous austerity measures were not enough, he wrote in it.
Dell is in a similar situation to other tech companies: After the industry experienced a boom with the outbreak of the corona pandemic because people switched to home offices worldwide, the PC industry is now suffering from a severe weakness in demand. According to figures from the consulting firm Gartner, the demand for computers at the end of 2022 collapsed more than ever before. And it doesn’t seem to get any better: a further decline of almost seven percent must be expected in the current year.
“A lot of companies spent money like 1980s rock stars.”
So Dell is not alone. Rising inflation and the looming recession are affecting the tech industry as a whole. After years of growth, companies are preparing for lean years – and are also cutting back on staff. The Dell rival HP, for example, looks similar: Here, too, about 6,000 employees are to go. And an end to this development is not yet in sight. “We expect industry-wide job cuts of another five to ten percent,” says analyst Dan Ives. “Because a lot of companies spent money like rock stars of the 1980s.”
The Google mother Alphabet, for example, is cutting 12,000 jobs worldwide, and the software company Microsoft is losing 10,000 jobs. And the Facebook parent is cutting 11,000 jobs – for the first time since the company was founded in 2004. The company is suffering from dwindling advertising revenues and billions in losses from its “Reality Labs” division. Among other things, the development of the “metaverse” is bundled there, a virtual world that company boss Mark Zuckerberg sees as particularly promising. At Salesforce there are 8000 jobs. The SAP rival also wants to close several locations. The network supplier Cisco has also imposed a restructuring program on itself. As part of this, up to five percent of jobs could be cut.
But Europe is not spared either. SAP, Europe’s largest software house, has announced that it will cut 3,000 jobs, about 2.5 percent of the SAP workforce, after a drop in profits. The second largest German provider of company software after SAP, Software AG, is also reacting to lower margin prospects with job cuts: around 200 people or four percent of the workforce would have to go. The online retailer Amazon even wants to cut more than 18,000 jobs, a few months ago an insider spoke of only 10,000 jobs.