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brake on hiring in american tech

The reasons for these job freezes vary from company to company.

From Facebook to Uber via Amazon and Twitter, several American technology groups are slowing the pace of their recruitments as the sector, euphoric during the pandemic, is going through a more difficult period.

Various announcements were made on the sidelines of the publication of quarterly results of groups listed on Wall Street.

In a phone call with analysts in late April, David Wehner, chief financial officer of Meta, Facebook’s parent company, spoke of an “adjustment” to hiring targets.

“We regularly reassess our talent pool based on our business needs,” a Meta spokesperson told AFP.

Amazon, second largest employer in the United States

“In the light of our projected expenditure, communicated in our latest results, we are slowing down the growth” of recruitment, he added, specifying however that the long-term objective remained to increase the group’s workforce, which employed 77,805 people at the end of March, up 28% year on year.

Another tech behemoth and second largest employer in the United States behind Walmart, Amazon, which had 1.6 million employees at the end of 2021 (more than double than in 2019), suggested that waves of recruitment were not to consider immediately.

“As the variant (Omicron, editor’s note) declined in the second part of the first quarter and employees returned from leave, we quickly went from an understaffed situation to an overstaffed situation,” said said the group’s chief financial officer, Brian Olsavsky.

In the midst of the saga around a takeover by Elon Musk, the outcome of which seems more uncertain than ever, Twitter has decided to suspend non-essential recruitment.

Uber boss Dara Khosrowshahi wrote in an email to company employees published by CNBC that new hires should be “treated as a privilege.”

If these groups have not announced layoffs, this is however the case of the online brokerage platform Robinhood, which indicated at the end of April that it would cut around 9% of its workforce, i.e. nearly 350 full positions. time.

Cameo, an application that allows you to order personalized video messages from celebrities, has terminated the contract of 80 employees, according to the site The Information.

Inflation

The reasons for these job freezes vary from company to company. Facebook, for example, insisted on the impact on its advertising revenues of the new rules imposed by Apple on data sharing.

Twitter is swimming for its part in full uncertainty with the Musk saga and its multiple twists, while Uber has suffered a heavy loss due to its participation in the capital of several start-ups with shaky financial health.

There are, however, common factors, starting with the end of the lockdown economy and the gradual lifting of health restrictions.

“Many tech companies have responded to a growing demand for digital services by recruiting and growing their revenues over the past two years,” said Terry Kramer, assistant professor at the School of Business. UCLA, which cites the emblematic case of the Zoom videoconferencing platform.

Speculative bubble

“A lot of what we’re seeing right now is a mature phase in technology adoption where these companies can’t and don’t need to keep growing at the same pace,” Ms. Kramer.

Another factor weighing on the sector: the still high inflation. It pushes the American central bank (Fed) to raise its key rates, which handicaps the ability of companies to borrow, a situation particularly unfavorable to tech.

“Many companies that relied on a growth strategy, not planning to make short-term profits, thought they could continue to obtain funds from the stock market or from private investors,” describes economic forecasting specialist Daniil. Manaenkov from the University of Michigan. “It’s questioned.”

On Wall Street, the S&P 500 sub-index comprising the information technology sector has fallen by more than 22% since the start of the year, the Nasdaq by nearly 25%.

For Dan Ives of Wedbush Securities, however, a speculative bubble, similar to that experienced by technology companies in the late 1990s, is not to be feared.

“This is a massive correction in a higher rate environment, which will lead to a clear bifurcation of the tech sector between winners and losers”, predicts the analyst.

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