Winter Stormland Digital Companies And Layoffs Become The Choice Of Taipan

Sundar Pichai, CEO of Google, who in 2023 fired 6 percent of employees or 12 thousand people and will be laid off more and more in the coming year. (Forbes)

JAKARTA The storm of termination of employment (PHK) continues to hit world technology companies. Many believe this condition will continue as early as the third quarter of 2023.

Elon Musk has taken the first step. Since officially acquiring Twitter Inc on October 27, 2022, Musk has made efficiency by reducing employees in order to stabilize the company's finances.

Reportedly more than 70 percent of employees left Twitter, either laid off or resigned until there are only 2,250 current employees.

Alphabet CEO, Sundar Pichai also has no other choice. By 2023, the parent company of Google is also preparing to lay off layoffs gradually. Pichai targets 6 percent of its employees or around 12 thousand employees. However, Google investors and billionaire Hedge-fundChristopher Hohn suggest greater efficiency.

Hohn refers to the previous period, when the number of Google employees increased to more than 100 thousand employees in the last five years. So the right number of employee reductions, according to him, is 20 percent or around 150 thousand employees.

Not only that, Hohn also advised Google to revise employee compensation based on 2021 data reaching more than 300 thousand US dollars. Hohn considers, "This is too much. Competition for talent in the technology industry has fallen significantly so Alphabet should be able to significantly reduce compensation per employee."

In particular, Alphabet must limit share-based compensation given the depressed share price," added Hohn.

Pichai also indicated that it would cut compensation and annual bonuses received by executive officials.

"This is an important moment to sharpen our focus, re-engineer our cost base, and direct our talents and capital to the highest priority," Pichai said as quoted by Bloomberg.

Similar to Microsoft CEO Satya Nadella. In his memo, he informed that he would make major changes in the company's business to adjust to the current conditions. It is likely that 10 thousand workers will experience layoffs gradually until the third quarter of 2023.

"Inevitably we have to cut costs amidst economic uncertainty. On the other hand, we also want to focus on artificial intelligence," Nadella said as quoted by the New York Times.

Likewise Amazon CEO Andy Jassy. Although it has reduced 10 thousand employees in 2022, the company's financial condition has not been able to be at a safe point. As a result, it is reported that he will again lay off 18 thousand employees.

"Amazon has gone through an uncertain and difficult economy in the past, and we will continue to do so. This change will help us pursue our long-term opportunities with a stronger cost structure," he said.

The same fate has also befallen other tech companies, such as Meta, Salesforce, Cisco, Snap, and others.

This phenomenon, according to the Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira, is indeed very surprising. It happened suddenly without a predictable pattern before.

Changes in people's lifestyles that are more practical in encouraging the digital technology industry to grow. In fact, it is getting faster during the era of the COVID-19 pandemic, when almost all people obey the rules of physical restrictions.

Tech companies are like flooded profits. They hire more people to present new features.

For example, Google is making rapid changes to the Google Meet video conferencing platform to accommodate more participants during the pandemic. Then, Meta on WhatsApp video conferencing products. Quick changes like this certainly require a lot of experience.

But apparently, said Bhima, this condition did not last long. In the post-pandemic, people's lifestyles gradually returned to normal as usual, not too full online. What is even more difficult, the condition of the global economy has not improved, and even tends to decline.

The tech company's premium advertising and service revenue continues to decline due to the threat of an economic recession, especially the customer base in countries such as the United States and Europe.

Not to mention the rising inflation and the trend of adjustment of interest rates that make investors act more cautiously, and even tend to avoid buying the assets of technology companies because they are considered too risky.

As a result, several companies see the current economic situation as an opportunity to close non-promising or unprofit business lines.

"The impact was then layoffs. The trend of consolidation of this global technology company will continue at least until conditions improve, until early 2024," Bhima told VOI, Thursday (26/1).

In Indonesia, the storm of layoffs at technology companies has been going on since last year. Supporting GoTo, Ruangguru, Shoppe, Sirclo, SiCepat, Tokocrypto, Tanihub, and many other start-ups.

His condition even continues to fluctuate to this day. According to Bhima, still facing considerable pressure, especially in the ecommerce sector, fintech, danagritech.

"Don't be surprised if later there are rarely any interesting promos or discounts. So, consumers pay more expensive digital services than before," he continued.

This condition, said Bhima, certainly has an impact on the information sector of communication, Micro, Small and Medium Enterprises (MSMEs), and the sale of motorized vehicles.

"For example, MSMEs that have an e-commerce platform account, their income can drop by 10-15 percent during the startup digitalwinter," added Bhima.

That is why, as the support of the Indonesian economy, MSME players must also be observant about the current situation.

What must be done is not only selling on one platform. It can be combined, for example with live sales on social media, such as on TikTok or Instagram, it can also be combined by reopening physical stores, because people are back shopping physically, then sales mode must also change compared to during the pandemic," he added.

Even so, as reported by VOI, Segara Insitute Piter Abdullah considers it only a business cycle. The future of the digital technology industry will continue to be promising.

Maybe it's not at a normal stage at this time. However, he remains optimistic, "This year will be better than the previous year."