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Microsoft is the latest in a wave of tech companies to announce layoffs

A MARTÍNEZ, HOST:

Microsoft is laying off 10,000 employees. It's the latest tech company to announce massive cuts to its workforce as the industry faces one of its sharpest downturns in a decade. NPR's tech reporter Bobby Allyn joins us now to discuss what's driving the slowdown. Bobby, it seems like every other day brings some other announcement about a tech company laying off staff. I mean, what's going on here?

BOBBY ALLYN, BYLINE: Yeah, it really does. So if you listen to tech executives explaining the layoffs, they tend to put it this way - the pandemic set off a frenzy of new hiring. Big tech companies brought on thousands of new employees to help, you know, all of us move more of our lives online. But now that the pandemic sugar high is fading, they're looking at their headcounts and realizing they just have too many people. And in Microsoft's case, it's 10,000 too many people. But Amazon has laid off 18,000. Facebook parent company Meta has cut 11,000 positions. Twitter has reduced its staff by two-thirds. This is happening, A, across the whole industry right now.

MARTÍNEZ: All right. Now, that's the explanation from executives. Any other competing theories explaining why Silicon Valley is shedding so many jobs?

ALLYN: There are other theories out there. Let's take Microsoft as an example. It's not a company that's exactly hurting for money right now. In its last quarter, it reported nearly $18 billion in profits. Last year, Microsoft moved to buy video game maker Activision Blizzard for $69 billion in cash. So skeptics ask, does it really need to be slashing jobs right now?

MARTÍNEZ: So are you saying, Bobby, that some tech executives might be actually using the current moment as an excuse to lay people off when they might not really be needing to?

ALLYN: Yeah. That is one theory. I mean, now, inflation is high. And corporate spending has slowed. But big tech should have the wherewithal to push through it, the theory goes. Now, Microsoft's cuts represent about 5% of its workforce. But it's still a lot of people to lose their jobs. There's a tech jobs data tracker called Layoffs.fi. And it found that at least 150,000 tech jobs were cut last year. This really is a stunning reversal because, A, for years, for really more than a decade, the tech industry has just been on a tear, totally unchecked growth spurt. And now it's just really slowing down.

MARTÍNEZ: So what's the job market, then, look like for the tech workers after they've been let go?

ALLYN: Yeah, so it's better than many. I mean, one survey found that 8 out of 10 techies who are laid off find a new tech job within three months of starting their search. So that does say that techies can quickly land on their feet, but surely not all of them, right? I mean, another thing to consider is that tech relies heavily on immigrant workers. And, you know, when you're on a visa that's tied to your job and you're laid off, the clock starts ticking for you to quickly find another employer sponsor. So many families are just sort of struggling right now, thinking, am I going to be laid off? And if so, is that going to cause a serious crisis?

MARTÍNEZ: Is there anything that can be gleaned off of the tech industry's slowdown right now that maybe the broader economy might be facing soon?

ALLYN: Yeah. So there are some experts who say that the tech industry's pullback is specific to Silicon Valley. But the tech world is seen as a economic bellwether. It's a huge employer, multitrillion-dollar industry. The companies are on the cutting edge. And they intersect with just about every industry in some fashion. So honestly, A, it's hard to see a tech downturn not having some fallout for other parts of the economy. But it's just too early to say definitively if that's the case.

MARTÍNEZ: All right. NPR's Bobby Allyn. Thanks a lot for your reporting.

ALLYN: Thank you, A. Transcript provided by NPR, Copyright NPR.

A Martínez is one of the hosts of Morning Edition and Up First. He came to NPR in 2021 and is based out of NPR West.
Bobby Allyn is a business reporter at NPR based in San Francisco. He covers technology and how Silicon Valley's largest companies are transforming how we live and reshaping society.