Column: Has the U.S. high-tech industry continued to reduce personnel, has it seen an appropriate scale | Reuters

NEW YORK (Reuters Breakingviews) – Google parent Alphabet plans to cut 12,000 jobs, adding to the impression that the U.S. tech industry is preparing for a slower-growing future. However, the industry’s headcount is still above what it was a while ago.

Already, Microsoft, Amazon.com, and Meta Platforms have all announced plans to cut nearly 40,000 jobs. The total number of job cuts announced by U.S.-based tech companies in 2022 will reach 97,000, the largest since the tech bubble burst, according to employment services firm Challenger Gray & Christmas. Most of the announcements were made during the fourth quarter of 2022, and job openings in the industry also plummeted at the end of 2022, according to data from nonprofit IT industry group CompTIA.

Still, the impact of the increased hiring that has taken place since the coronavirus pandemic is still there. Preliminary data from the U.S. Department of Labor shows that the U.S. tech industry employed a record 4.4 million people in December 2022, 440,000 more than in February 2020, just before the pandemic hit the United States. Alphabet, Microsoft, Cisco Systems and Amazon have all pledged to cut their workforce by around 5%, but even if all are implemented, the industry would still employ 4.2 million people, about 5% more than at the end of 2019.

However, it seems almost appropriate. While tech industry incomes and employment tend to be more volatile, they tend to grow faster than the economy as a whole. Between 2012 and the end of 2019, for example, U.S. gross domestic product (GDP) grew 2.3% a year, while tech jobs grew at about 3%. For top executives like Alphabet’s Sundar Pichai and Microsoft’s Satya Nadella who don’t like too much downsizing, a job cut of around 5% is enough to get the cost issue serious without suggesting a “total rollback.” If you think about it, you can prove it to investors.

●Background news

* Google parent company Alphabet plans to cut about 12,000 jobs. Reuters reported after confirming an internal memo on the 20th. It will reduce around 6% of the total workforce.

* Microsoft announced on the 18th that it will cut about 10,000 jobs, or about 5% of its total workforce. Amazon.com announced a plan to cut 18,000 jobs on the 5th, and Meta Platforms announced in November last year that it would cut 11,000 jobs.

* The total number of job cuts announced by U.S.-based tech companies in 2022 will reach 97,000, the most since 2002, according to employment services firm Challenger Gray & Christmas.

(The author is a columnist for Reuters Breakingviews. This column is based on the author’s personal opinion.)