More tech employees should expect to lose their jobs even after 330,000 roles got wiped

• Silicon Valley has laid off over 330,000 workers since last year but the carnage may not be over.
• There are signs that some tech firms have not gone far enough to adjust to a new economic reality.
• For workers, it means potentially bracing for more layoffs if CEOs decide they need to cut more.

The tech sector has cut more than 330,000 jobs since the beginning of 2022, per layoffs tracker Layoffs.fyi, but it ain't over yet.

That's the message from analysts watching the current industry contraction and how it's affecting company bottom lines.

The major technology firms still have room for cuts, they say. Amazon, Google, Meta, Microsoft, and Twitter have collectively chopped around 70,000 staff — but ongoing concerns about profitability and over-hiring means they could slim down more.

"At a certain point decision-makers at these companies forgot that the harvest period of trend-busting growth and cheap money wouldn't last forever," Jamie MacEwan, senior media analyst at Enders Analysis, told Insider.

Google and Amazon should cut more jobs: analysts

Analysts note that Google, for example, added around 71,000 employees in the past three years. It has so far announced a single round of job cuts, impacting 12,000 workers. That amounts to a 6% reduction in headcount, compared with cuts of more than 10% at other firms.

In a research note on Wednesday, analysts at Jefferies suggested Google should follow Meta by reprioritizing investments in its core business drivers. They say Meta has seen "limited impact on its growth" after laying off around 25% of its workforce since November.

"It is reasonable to think that GOOGL could make similar cuts by pulling back on non-core roles while also leaning into core business drivers (Ads & AI), setting itself up to take share," the analysts wrote.

It's clear that Google is currently on a big cost-cutting drive, and that could extend again to jobs.

In a recent memo to workers, Google's chief financial officer Ruth Porat announced additional cost clawbacks, such as shortened cafe opening hours and reductions to the frequency with which employees can make upgrades to personal devices.

Elsewhere, analysts at Oppenheimer say "more layoffs are necessary" at Amazon to boost profitability.

The company has announced multiple rounds of job cuts impacting more than 20,000 staff over the last six months. But that's a small fraction of its overall workforce which at the end of 2022 stood at 15 million workers, excluding contractors and part-time staff.

The bank's analysts say that profitability per employee at Amazon excluding its warehouse workers — a measure of its efficiency — is "significantly below peers." That tallies with Insider analysis of revenue per employee at the major technology companies, which showed Amazon's fell almost 7% between 2018 and 2022.

And then there's everyone yet to conduct layoffs

It's likely that layoffs will spread even to relatively efficient and smaller companies.

Per the chart above, Apple has avoided mass layoffs to date because it's more efficient and profitable. From 2020 to 2022, Apple's workforce grew just 12% to 164,000, according to SEC filings, while its peers, like Meta, grew almost 50% in that same time period.

Despite this, Apple may be running out of things it can do to avoid cuts. Threats of layoffs within its corporate retail team emerged this week. Staff were told to reapply for jobs within the company or face the harsh reality of being let go.

The other area of vulnerability is startups.

Though many of the crises created by the collapse of Silicon Valley Bank (SVB) last month have been averted, the risk of layoffs persists.

Bloomberg reported last month that at least one startup had been planning to make layoffs on the day the bank imploded, but delayed its move because it held an account with SVB. With the dust settling, startups may feel able to go ahead with their cost-cutting plans.

There's also the current tough funding environment. The venture capital backers who have spent years plowing cash into startups have increased their due diligence of founders and businesses, made cautious by the economic downturn. Data released on Wednesday by Pitchbook and the National Venture Capital Association showed that US VC deal count in the first three months of 2023 fell more than 25% from the same period last year.

Insider reported in January that layoffs at US startups were up 1,700% from the same period the prior year.

With less cash available, cuts will likely persist and workers in tech should brace for more instability this year.