Job cuts are once again hitting technology firms. Some of the channel’s most iconic digital players, which reach millions of users daily, began the year tightening their workforces after a wave of reductions last year. Google has announced plans to lay off hundreds of engineers, Google Assistant staff, and hardware teams. PayPal revealed a 9% downsizing, roughly 2,500 employees, following a similar round that had already shaved about 2,000 roles. Entertainment platforms tied to online media, such as Spotify, Twitch, and Audible, also anticipated reductions. The pullback comes as funding costs rise and investment in artificial intelligence increases to meet uncertain economic conditions, pushing these sectors to belt-tighten.
This new cycle of layoffs ties to the drive for efficiency. Investors are demanding profitability and not just growth. The reductions aim to trim “fat” from these companies, notes Carlos Molina, a digital business expert and creator of the Multiversial newsletter. Google’s CEO Sundar Pichai recently emphasized freeing resources to enable new investments, removing corporate layers, and streamlining internal processes. “We are a highly profitable company, and Wall Street wants more,” Pichai stated. It’s worth recalling that many Silicon Valley firms expanded during a decade of ultra-low interest rates, which helped fund major investments to grow.
The 2020 pandemic that forced remote work worldwide spurred growth for the big tech firms. These companies expanded massively to meet demand during lockdowns, but once confinements ended they had to adapt. Moreover, rising inflation and higher interest rates have made borrowing costlier, pressuring firms to improve efficiency and reduce costs, explains Juan Jung, economics professor at the Pontifical Comillas University and expert in digital economy and ICT.
Google invested about $7 billion in 2021 to expand U.S. office space and hired roughly 10,000 new employees. Zoom, the video conferencing platform, saw revenue of €2.206 billion in 2020, up 326% from the prior year, a signal of the era’s hiring surge. Google’s headcount rose from about 119,000 in 2019 to 150,000 in 2020, and further to 187,000 in 2021. Microsoft grew from 144,000 in 2019 to 221,000 in 2022, while Amazon expanded from 630,000 to 840,000 employees, then doubling by 2021. Jung notes that what we observe in 2024 is the second phase of a process that began with substantial layoffs in 2023.
The drive for technological excellence compels firms to boost efficiency while advancing their tech. Investments in research and development are not necessarily reduced, as many firms race to develop artificial intelligence. Yet, with high interest costs, workforce cuts may be necessary to curb expenses, Jung adds.
Gaming Sector Faces a Wave of Job Cuts
The video game sector is also feeling the squeeze in these early months of the year. Sony announced it would cut about 900 jobs in its PlayStation division, roughly 8% of its global workforce. That adjustment has affected major studios such as Insomniac Games, Naughty Dog, and Guerrilla Games. Riot Games, owner of popular titles like League of Legends and Valorant, plans to lay off around 530 employees, about 10% of its staff. These steps follow a 2023 round that already trimmed up to 6,500 jobs globally in this sector. Iconic cases include Epic Games cutting 16% of its staff, and Ubisoft letting go of 124 workers.
“After careful consideration and extended leadership discussions, it became clear changes were needed to keep growing the business and sustaining the company,” stated Jim Ryan, president and CEO of Sony. Ryan defended the need to “step back” and pursue a long-term, sustainability-driven focus that optimizes resources for success. For Riot Games, CEO Dylan Jadeja wrote to employees emphasizing the aim to “refocus” on activities with the highest player value, meaning workforce adjustments. “We are refocusing on fewer high-impact projects to move toward a more sustainable future,” Jadeja explained.
As with large technology firms, the gaming sector has had to scale back after pandemic-era expansion. Household entertainment spending surged during stay-at-home periods and has since returned to pre-pandemic levels. The trend now begins with cutting projects and staff, a move that aligns with the broader need to recalibrate in a tighter economic environment.