Software Engineering Career
10h
1263
Cleared Amazon onsite, but lowballed.
Tech Industry
11h
845
Update: Trans Coworker Stealing Breast Milk
Tech Industry
8h
1394
I am starting to think Chinese interviewers currently fail non-Chinese candidates on purpose.
Tech Industry
7h
2181
Crossed a line with my boss
Personal Finance
23h
2957
Calculated my NW and now i can't sleep
Companies are justifying layoffs as a means to realign their cost structure to the macro environment. Most big tech companies are laying off anywhere between 5-10% of their staff. Including the severance and benefits packages, the layoffs are likely going to cost 8 months to 1 year of salary all-in, per laid off employee. That is also the timeframe by which economy would start to recover anyway. Add to this the fact that layoffs are more heavily weighted towards recruiting and ops functions, who are in the lower end of the pay spectrum in tech. I don’t believe that the companies doing layoffs are going to save more than 5% of their yearly expenses. So what’s the point of all this? Perhaps I am wrong about these assumptions, but would love to hear what y’all think.
Yah this part is always interesting to me, with such severance packages companies are basically saying that they won't rehire these positions in at least a year but likely more to come out ahead.
Excellent question. Id also like to know. I'm not sure I agree that its 8 months to a year though. Id expect more like 5 months. But Presumably the employees also added value.
Layoffs save a ton of money. Lazy & non productive employees are a huge drag not only financially but for team morale too.
Lol. You know what causes low morale? Layoffs.
Yeah for bad employees who know they are next or don’t understand that it’s a company. Then due to low morale they perform less and get picked up by PIP. Win win for the stock price and future productivity.
Layoffs push other employees to buckle up and work and cut the flab, productivity improves. Layoffs are also helpful to get rid of squatters that know the system well and navigate the mazes well and leech the system
Wrong. Junior workers get scared and work harder, smarter and more experienced people start looking around for new opportunities
Not really, it's exactly the opposite and easy for juniors to jump ship
It costs more like 4-6 months of salary and RSU. They may save some money after that. Don't think they'll go back to pre layoff numbers in the next 18 months. So yeah they will likely save 1 year+ of salaries and all the savings directly impact the net income which impacts stock valuation. All of this is to satisfy the share holders
But if you look at google profit, they make over 20b/quarter of profit. Sure, saving 2b is a lot, but doesn’t really move their margin by a lot. I’m not for layoff and I hate it. But why not do an even more massive layoff if this is what they want to accomplish?
Maybe they realized they never should've over hired. The layoff is more about resetting rather than cost cutting?
Not really sure where to start here but maybe the finance support team should make more than engineers since it’s such a difficult concept. Also, would like to get to know your 1 year cost when most companies give around 10 weeks severance, you know 42 weeks shorter than 1 year. I’d recommended you understand cash flow, burn rate, and match it to the other financial statements.
Google is giving out 6+ months of severance. Even amazon is 4+ months. Plus accelerating RSU vests. It’s at least going to cost 6 months of salary.
Agree on the 3-6 month range. These companies have a lot of money so some of it is perception while another bit is not screwing over workers because it’s still a relatively small community. To your initial question human capital is an easy cost to cut quickly. To another users point severance is one time fee so it’s easy to make the other claymations based off of that.
Exactly what I felt as well.
Yes even tho we spent more than a billion paying severance
Market is weak, a high PE ratio is not justified for the stock price now, thus to maintain stock price, Earnings (E) has to increase. Cost cutting is the quickest way to get there. Later if economy improves and they hire back all the talent, Earnings will drop, but the market will be more tolerant to high PE ratio at that time. Just a game of maintaining stock price.
Yes. Stock market is forward looking. Hence Forward P/E. If it didn’t save money, why would anyone do it? Also, severance is a fixed amount which investors now know beforehand. So they can do their math to establish companies operating expenses and growth.
That is my point. I don’t think the P/E improves by more than 5%, the impact of which on stock price could be negligible.
It does increase more. Think big and long term. In case of google, they won’t re-hire 12k in next 2-3years. And in that time their revenue will grow.