With over half of the year gone, the US economy shows little sign of revival, as industries across the board resort to layoffs, pay cuts, and downsizing measures. The high-tech sector, in particular, has been severely impacted.
According to IT Home, on May 14th, summer internships have long been a tradition in Silicon Valley, typically lasting around three months. However, due to the persistent wave of layoffs among major US tech companies this year, the majority of tech firms have recently announced their plans to significantly reduce the scale of their summer internship programs.
According to Fortune magazine, companies such as Google, Meta, and Nvidia have announced a decrease in the number of summer internships this year compared to previous years. This shift comes as a surprise, considering Google’s past pride in its internship program, even collaborating with Hollywood to produce a comedy movie titled “The Internship” centered around interns. However, in January of this year, Google laid off approximately 12,000 employees.
Meta also withdrew its one-year internship hiring program in the UK earlier this year. Nvidia, on the other hand, stated that it will only be hiring around 600 interns this summer, a significant decrease from the over 1,500 interns the company hired last year.
These companies’ efforts to downsize interns not only hurt their channels to develop new talent and increase diversity, but also left many college students disappointed and worried. Career services at some universities say the process is more difficult and stressful than ever for students seeking internships at “big tech” companies.
Even when they do get internships, students worry that their opportunities will be canceled with more layoffs. And for those graduates who have already received a formal job offer, they are also at risk of having their entry date pushed back.
Still, not all tech companies are cutting back on internship programs. Companies such as Microsoft, Amazon, Apple, Netflix and Intel did not disclose the number of recruits this summer, but also did not indicate that they will reduce. Uber and Salesforce said that the number of students hired this summer will be the same as last year. The companies stress that they remain committed to providing interns with authentic, meaningful and fun work experiences and helping them build confidence and network.
For many interns, a summer in Silicon Valley is an unforgettable experience and a chance to showcase their talents. If they perform well, they may get a formal job offer from the company. According to Intel, 60 percent of past summer interns have accepted a full-time job at the company after graduation. But that possibility is diminishing as tech companies’ hiring needs decline. Last year, Google canceled thousands of job offers for temporary and contract workers.
Since the beginning of this year, the Biden administration has continued to report the good news of the “new low unemployment rate,” but in contrast to this, the US technology industry has rolled up the surging “layoffs.”
The latest data show that last year, the US technology industry laid off a total of 97,000 people; In the first two months of this year, the number of layoffs at US technology companies has reached about 89,000.
At the same time, the “layoffs” are spreading beyond the tech industry, with companies such as McDonald’s, Wal-Mart and Disney also pushing ahead with layoff procedures.
Public opinion believes that under the impact of high inflation, tight credit, slowing demand and other adverse factors, fears of recession have intensified, not only the prospects of technology companies are worrying, but the “white-collar recession” seems to be taking place in the United States.
Recently, layoffs have become the common choice of many technology companies.
According to the latest data summarized by layoffs.fyi website, in the first three months of this year, by the United States technology giant “pilot,” the world’s more than 500 technology companies cut a total of 167 thousand people, more than the total number of global layoffs last year.
U.S. technology companies cut about 89,000 jobs in the first two months of this year, slightly less than the total of 97,000 layoffs for all of last year.
Among them, Amazon laid off 27,000 people, Google laid off 12,000 people, Meta and Microsoft laid off 10,000 people, followed by emerging companies such as Coinbase, Zoom, Glassdoor, Twilio, and Indeed, with the highest proportion of layoffs reaching 25%. Some start-up layoffs cover all sectors.
The reason, public opinion believes that the technology industry layoffs follow a common “script,” That is, in the context of the Fed’s violent interest rate hike, rising financing costs, the global economic slowdown, fierce market competition, and reduced consumer spending, technology companies that experienced excessive expansion during COVID-19 need to callback and find a way out of profitability.
At the same time, the “layoffs” in the technology industry are spreading outward, with large-scale layoffs and hiring freezes on Wall Street and the real estate industry, and other industries such as consumption and entertainment are also “trembling.”
Last month, McDonald’s closed its US offices to buy time to finalize layoffs and corporate restructuring. It is reported that the world’s leading fast-food chain of more than 150 thousand employees. How extensive this layoff will involve has sparked speculation.
Prior to this, the United States retail giant Wal-Mart announced layoffs of 2,000 people, media and entertainment giant Disney layoffs of 7,000 people, and even defense giant Lockheed Martin also reported layoffs of more than 100 helicopter department employees.
After giving some full-time employees a raise last year, Microsoft’s chief executive, Satya Nadella, told employees in an e-mail last Wednesday that the company will delay giving full-time employees a raise this year. The state of the economy and investments in AI are the reasons for the company’s decision.
In addition, performance bonuses for Microsoft executives will be significantly lower than last year.
Microsoft executives have repeatedly said in recent months that the economic downturn will take a toll on the company’s cloud business. Microsoft announced in April the latest earnings show that Microsoft’s quarterly revenue grew 7% year-on-year to 52.9 billion U.S. dollars, although higher than the market expected 51.03 billion U.S. dollars, but this is the second consecutive quarter of Microsoft’s revenue growth only single-digit. Among them, smart cloud revenue, including Azure, increased 16% to $22.08 billion. The company expects capital spending to increase significantly in the current quarter due to AI spending.
At present, the US technology industry is entering a jobs winter. According to Layoffs.fyi, which tracks layoffs, more than 270 thousand tech jobs have been shed worldwide in the past six months.
On the same day, Nadella also stressed Microsoft’s efforts in the field of artificial intelligence. “We are clear that we are helping to drive a major platform shift for a new era of AI, and we are doing so in a dynamic, competitive environment, while also facing global macroeconomic uncertainty.”
At the beginning of this year, with the popularity of ChatGPT supported by Microsoft, major small and medium-sized enterprises in the field of artificial intelligence began to fight in the world. While AI has been a core bright spot for Microsoft over the past few months, it currently has no impact on Microsoft’s revenue. Most of Microsoft’s sales still come from software sales and cloud computing services.
The steady development of these businesses can be a good source of AI business and provide the scene and power for the application of AI technology.
Not everyone panics when tech companies leave San Francisco or lay off workers, close big stores, and a struggling downtown threatens to drag the city into an economic crisis.
Instead, some are hoping that falling prices will lower housing costs so they can move to the city. Years of persistently high house prices have put them off, or barely able to pay their rent. Falling house prices could also help restaurants and other employers replenish their workforces, as employee attrition is extremely high during the pandemic.
And rents have not fallen enough for the shortage of low-wage health workers, public school would-be educators, hotel workers and cleaners, who still struggle to return to the city. Some people with slightly higher incomes, such as working for nonprofits and school teachers, have been able to move in.
The “doom loop” is a self-reinforcing recession, In San Francisco, downtown office buildings were emptied during the pandemic, and remote work kept them empty, causing real estate to depreciate, city tax revenues to decrease, and public services to decrease, forcing residents and businesses to leave, further shrinking the tax base.