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Snap (SNAP) on Monday became the latest tech company to announce layoffs, cutting 10% of its staff "to ensure we have the capacity to invest incrementally to support our growth over time." This followed the company's 2022 decision to cut 20% of its staff, in addition to smaller cuts last year.
And in doing so, Snap made the easiest decision available to every tech company today — trim head count, cut costs, and frame it as offering flexibility to invest tomorrow.
This logic invoked by Snap and so many others during head count reductions holds water because it is plainly true. The tech industry at large underwent an enormous hiring binge during the pandemic, and many dynamics these investments were designed to target have either cooled off or never materialized.
Cutting costs to ensure future flexibility, by this logic, just makes business sense. According to data from layoffs.fyi, job cuts in the tech industry this year now total more than 32,000, with giants ranging from Microsoft (MSFT) to PayPal (PYPL) and eBay (EBAY) all participating.
But the trend to cut jobs started by Big Tech firms a year ago has spread throughout the corporate world and almost come to require that management teams find a way to participate.
Estée Lauder (EL) stock rose 12% after the beauty giant announced its own workforce reduction on Monday. Companies ranging from Xerox (XRX) to UPS (UPS) have also made deep cuts to their employee bases this year.
The stock market is clearly indicating that management teams have an incentive to participate.
And the overall US labor market climate — one in which a regular drumbeat of white-collar job cuts is contrasted by strong overall job growth — offers additional cover for leaders to make these calls.
Because not only are you matching the industry's ebbs and flows by cutting staff, but you're doing so in a labor market that, in the aggregate, suggests there remains plenty of demand for these workers' services elsewhere.
Back in March 2023, we argued the wave of tech-related job cuts and the swift demise of Silicon Valley Bank taken together showed how the tech industry moves in a tight pack, riding the same currents.
The corporate strategy playbook being used outside the confines of this industry in 2024 shows the inclination to follow is a stronger and deeper force in corporate America than we'd previously given credence.
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