The wave of tech layoffs is believed to be caused by companies hiring too many employees to do “jobs with no real substance.”
According to Business Insider, the cuts in a series of technology companies such as Meta, Amazon or Alphabet (Google ‘s parent company) since the end of last year are due to the previous boom phenomenon: over-hiring to do jobs that are not really necessary.
“Big tech companies are responsible for hiring too much and then firing too much. They hire new people to fill fictitious positions just to meet a vanity hiring metric,” Keith Rabois, a tech investor and CEO of financial aid company OpenStore, said at an Evercore banking event in Miami last week.
Rabois, who was CEO of PayPal in the early 2000s, estimates that Alphabet and Meta have thousands of employees who do nothing. “They have nothing to do. They are essentially in a glorified role,” he says. “It’s all on display. There are people who do nothing but go to meetings.”
According to the billionaire, Silicon Valley companies intentionally hire too many engineers and tech talent just to prevent them from leaving for competitors. “It’s a pretty coherent strategy,” Rabois commented.
Other experts agree. According to Marc Andreessen, co-founder of Andreessen Horowitz (a16z) and former Meta board member, there is a class of employees in Silicon Valley called the “Laptop Class.” He mentioned the phrase on Twitter early last year when the wave of hiring at US tech companies was at its peak. The “Laptop Class” refers to people who regularly use laptops for work, but their role and image are “completely abstract, without tangible physical reality,” and their opinions are not recorded.
In mid-2022, Andreessen continued to state on Twitter that large tech companies in Silicon Valley are having double the surplus of previous years, with “big bad companies” having four times or more surplus.
Tech billionaire Thomas Siebel, CEO of AI company C3, said giants like Meta and Google have hired so much that they don’t have enough positions to fill.
“It’s strange that Google and Meta are taking on a bunch of people and not giving them jobs. They’re really doing nothing,” Siebel said.
In mid-March, Britney Levy, a former Meta employee, also said on TikTok that the company treated employees like collectible Pokemon cards. “I was part of a group of employees who were hired in a strange position: the non-work group,” she said. “I could take a whole day off and no one would know.”
In mid-February, two Meta employees revealed to FT that many people in the company had not been assigned work and were still getting paid for doing nothing because management could not plan because approving decisions took months.
Amid the wave of layoffs, billionaire Rabois praised Elon Musk, who has aggressively cut 70% of Twitter’s staff since taking over the social network last October. “People are watching Elon and Twitter. He’s clearly setting an example, albeit an extreme one,” Rabois said. “The focus of the tech industry is going to shift away from a growth-at-all-costs model to a focus on profitability, like revenue generated per employee.”
According to data from the layoff tracking website Layoffs.fyi, in 2022, more than 1,000 companies cut 160,000 employees. However, in the first three months of this year alone, the number of layoffs has exceeded 100,000 people. Among them, companies such as Meta and Amazon have carried out a second round of layoffs in just a few months, with the number reaching tens of thousands of people. Most of the reasons given by company leaders are due to the gloomy economic situation, political instability or a strategy to streamline the apparatus and cut spending. However, experts assess that the decision to lay off may be an act of imitation, rather than bringing real cost efficiency.
