Microsoft to lay off 11k employees | Hacker News Reader

Microsoft to lay off 11k employees

reuters.com

659 pointsgeorgehill453 comments

Bloat is real, but there's another labor market dynamic in play here.

There was a huge run-up in corporate employee compensation in the tech sector over the last few years. (Some called it a "shortage," remember. Some of it is genuine growth in the sector, some of it was definitely "labor hoarding" by large companies that could afford to carry excess staff in a tight market as a hedge against being unable to fill critical roles - or to deny talent to competitors.)

While I would be surprised to learn of explicit collusion to suppress wages (unlike the _In re: High-Tech Employee Antitrust Litigation_ case,) collusion is not needed. The more tech employers lay people off, the more incentive there is for the next large tech employer to announce a layoff, and that's discoverable without collusion. In the aggregate, the benefit to flooding the market to reduce employee bargaining power offsets potential loss of critical talent, because it drives down the cost of acquiring new talent.

The "war for talent" quickly turns to the "war on talent."

You're describing a monopolized labor market. Sure, there may not be felonious collusion, but many of the illegal elements of a monopoly are very much present.. as you essentially point out. I'm also not sure why you would be surprised to learn there is collusion, the size and timing of these blocks are certainly curious, and I think further investigation would reveal quite a bit more than you're imagining here.

I also wouldn't describe it as a "war on talent" when it is actually a "war on wages." This is is also the reason I wouldn't be surprised to find actual collusion here.

The war on wages is being waged (? is that the same word?) by the Fed. Companies just follow.

That's a good point. Few people realize that a big part of fighting inflation is getting wages down. Jerome Powell said as much in an interview in May of last year:

> So in principle, it seems as though, by moderating demand, we could see vacancies come down, and as a result—and they could come down fairly significantly and I think put supply and demand at least closer together than they are, and that that would give us a chance to have lower—to get inflation—to get wages down and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially. So there’s a path to that. [0]

To be fair, much of the wage inflation (particularly in FAANG) was also led by an easy money policy.

I take issue with heavy handed manipulation of the money supply that leads to these weird dynamics. I've written about it before [1] that a big risk is ever growing Fed power in the form of heavier regulation or a digital currency. Imagine someone can flip a switch and decide that everyone earning above $X will take a pay cut to fight inflation, all without any oversight or judicial proceeding.

[0] https://www.wsj.com/articles/transcript-fed-chief-powells-po...

[1] https://mleverything.substack.com/p/inflation-and-government...

Not just Powell, every Fed kept talking about "we don't want to repeat history". What they meant is 1970-1979, when they were beating down the economy for a decade and when they decided to let the pressure go, inflation went right back where it was before the beating. Because the wages were still up and with the power of the unions it was very difficult to bring them down. At least that's how it was explained to me by a stock market expert.

So until we give up our fat checks from FAANG they will keep beating FAANG down. I dunno, fuck them maybe? But the same expert told me many times: do not play against the Fed.

It is the same spelling of the word, but the first is a noun and the second is a verb. Yay for homonyms :)

If you want to avoid repeating that word you could go with

"The ware on wages is being conducted by..."

I'm sure there's other, equally good ways to phrase this, too.

Winner.

> the size and timing of these blocks are certainly curious

The timing of the layoffs was exactly "as soon as all investors decided to stop their long-term deals". It's really not an evidence of collusion, except maybe of the investors. (But they too had an explanation.)

People are confused here because MS doesn't care about investors timing, but they had a clear trend to jump into.

That said, other evidence may be more revealing. This is strictly about timing.

I think you're right in that this is MS jumping on a trend.

Most big companies need to purge workers on occasion, but don't because it sets off alarm bells.

Unfortunately, this is an opportunity for companies to make big cuts without standing out.

No conspiracy needed just raise interest rates with this much debt, turn money printing into QT and cause a recession. Thin wedge is the most speculative areas: i.e tech.

Or maybe it's just because we're entering a recession which makes it necessary to cut costs.

There's no reason to view it as a pure tech-only thing. Every single company has hoarded talent in the past two years owing to the tight labor market. And it only needs some folks to signal before the flood gates open.

Finance is beginning now but a lot of layoffs will follow in H1 2023 IMO.

I don't attach any positive or negative moral value beyond everyone just working in their own self interest.

These layoffs are precisely intended to suppress tech employee wages, which like any other sector, have remained fairly stagnant for the last 5 years.

> collusion is not needed

It's not explicitly needed. However, rest assured there's a mutual understanding among all big tech executives that the next few years are going to be incredibly profitable for them.

Think about it. They can do layoffs as many times as they want. This forces lower wages. They can still use inflation, the pandemic, the recession, and war as an excuse to keep raises low (or non existent). They can keep current employees in fear for several years.

Hey, you're right -- this is a bargaining chip for BigCo, but the "invisible" factor here is that the economy is clearly in freefall and no one is ready to call the emperor naked. Everyone's cutting their losses, and in sectors as important as tech and with companies as big as MSFT, there's always some government support and "insider insight" into these events. If BigTech comes out of this on the other side, I fully expect one big company to be absorbed / dependent upon another. If not, this is prime time for underdogs to really show what they are capable of.

Free fall? That is some ripe hyperbole.

As soon as the dust clears the hiring spree will ramp up again. This is a colluded (public collusion, probably a better term for it that I don't know) wage reset.

Is this a war on talent, or just free market dynamics?

They are both free market dynamics.

'Free market dynamic' just means 'natural' - for some reason people think natural = good.

Cystic fibrosis is natural. So is the Plague and brain tumous.

Collusion, wash trading, self-dealing and insider trading are all 'free market dynamics'.

i always found that word "talent" condescending, like "consumer".

this is HR-speak. i see my colleagues as (code)monkeys not as talent, and i hope they see me the same.

I'm wondering what data really drives the back-and-forth at big tech. We've seen google, amazon, microsoft, meta, etc.. do hiring freezes, then layoffs. Hiring freeze, then back open, or layoffs then more layoffs later.

I would expect a longer term plan than just looking forward or backwards one quarter which seems like what has been happening the last year. I would assume they had better information and insights than common investors, but the activity out of these companies in relation to hiring and layoffs has seemed to be as sudden as people changing their stock allocations.

Mass layoffs give you the opportunity to quickly purge poor performers without as much paperwork. It's advantageous to have regular rolling layoffs because of this if you can justify them by economic conditions.

There's also an effect of wanting to do smaller, pulsating layoffs over the course of many months or even years rather than one massive layoff of the size you actually need, because ultimately no one knows exactly how the machine of a corporation works, and you have to be careful not to cut so deep that you go beyond cutting out fat and start to damage critical systems.

A rapid, 90% loss of workforce like what happened at Twitter might be what the company ultimately needed, but cutting that fast and deep is an insanely risky operation that could lead to a company hobbling along in a compensatory state until it finally falls to decompensatory systems collapse that you can't recover from.

> Mass layoffs give you the opportunity to quickly purge poor performers without as much paperwork. It's advantageous to have regular rolling layoffs because of this if you can justify them by economic conditions.

I've heard people say this, but it seems contrary to how layoffs are run in practice:

• entire teams or divisions are often laid off with no eye towards individual employees' tenure, experience or skills

• decisions happen on a condensed time scale by higher-level executives—not exactly conducive to a nuanced view of individual employees' performance, which companies struggle to assess effectively at the best of times

The "common knowledge" about what layoffs accomplish and why they're necessary really doesn't match what happens on the ground.

I've never seen a cold and calculated layoff. It's always been exasperated irrational arm-waving risk mitigation. The "good" people aren't kept - instead it's the ones that can navigate the political waters.

For every one competent executive there seems to be 3 deluded narcissistic idiots who will slash and burn people who are overqualified and under-utilized for the positions they've been incompetently assigned.

Now before you think I'm a victim of layoffs, I'm actually the political navigator. I constantly survive layoffs as I see the most talented people get let go and the best teams get broken up and reassigned, it's nuts.

One of the best techniques is to get yourself into what I call a "management island" - essentially you have either 0 or many bosses, just not 1. The next one is to be associated with a small bet - essentially a cheap investment that may yield a great long-term payoff, preferably related to the company cash cow. A third technique is to not attend too many events. Vagueness works in your favor. People should know generally but not specifically what you do. With details comes critiques so keep it ambiguous by staying quiet.

If you survive a layoff then you must not let a good crisis go to waste. Use the fog of the firing and the power vacuum to resituate yourself into this political dynamic as the dust settles. Of course these techniques only work at large companies.

I learned all of these techniques from years in management. There's more but that's a good start

Great write up and very useful in an industry where a lot of people seem to think "doing a good job" is enough to get recognised, lots of money and continuous promotions. The transition from IC into Management really needs a head shift and I think a lot of software engineers aren't prepared for the machinations of modern corps.

Yup, most mass layoffs are done without consulting the directly/skip managers who actually know who the strong performers are.

Good advice. It reads like the start of a modern corporate version of "The Prince".

you should write a substack or a podcast. Lots of ppl are oblivious to this stuff.

Yeah, unfortunately, this is believed by so many low level employees that it hurts their confidence, if they ever are part of layoffs. I wish organizations really educated employees how layoffs work.

I was part of layoffs in 2008 in which my whole department was eliminated, including managers and their managers. The developers who were hurt the most, were the smartest ones who could not believe that C-level executives didn't see their contributions. Their egos were bruised and some even switched from development to other fields.

I have an alternative theory. In bad times consumers no longer want to pay for a cherry on top. So you go back to basics and lay off the people putting it there.

I'd adjust this and say the execs believe that, so they do it, whether or not it's true.

I seriously doubt these layoffs are from actual, measurable consumer responses.

Why are we spreading the “poor performers are the ones let go” trope that hurts anyone laid off? That’s a very dangerous assumption to be spreading around blindly.

It's simply not true and very observable if you've ever been at a company that does layoffs. Plenty of good teams get let go or entire groups in the company from management down are let go, it just doesn't make sense that they would all be "low-performers". Some low-performers will be caught up in layoffs, sure, but plenty will remain at the company too.

Might be conflating groups with individuals. The teams/orgs that tend to be hit the hardest tend to be not the most productive/cutting edge except when they're research teams way out on the horizon.

> Mass layoffs give you the opportunity to quickly purge poor performers without as much paperwork

This is repeated a lot but having lived through 3 layoffs (and survived 2) in my career, that has never been the case. Every time it seemed random, one in particular where EMs were upset that they didn't have the chance to pick their faves.

What % of their work force is 11k employees? Article says 5%.

Would also be curious to know what % of the 11k are engineers/breakdown by department/org, etc.

Yeah, 5% is a small, manageable number. Small enough that if you find you accidentally cut important people or roles, you can quickly get them back.

The point in my second paragraph is that if the company actually needs a 15% layoff to maintain itself long term, it would be safest to do it in three smaller 5% waves rather than one fell swoop. After each layoff, you let the system settle and recover, making sure that the body is still generally healthy before continuing with the next operation.

> it would be safest to do it in three smaller 5% waves rather than one fell swoop

This disregards the effect of repeated layoffs on the morale and mental health of human beings, which affects how "the system" settles and recovers.

Generally speaking, they probably want about 5% loss / year, so they can continuously hire new starts and eliminate vacated positions as required.

> Mass layoffs give you the opportunity to quickly purge poor performers

That would be true for poor performing projects. Try a bunch of projects; many don't take off; cut the chaff all at once.

What I've seen in various companies were cuts of all kinds of employees, regardless of their individual performance. Large cuts weren't about the employees but about the projects or teams. I've also lived through a cut which was basically reducing headcount across all teams. Cutting 11k employees isn't a micro-management thing; individual performers get hit all the same.

The fallback of some such cuts was that it took years to later re-acquire competent employees, especially since they were offering work conditions average for the market.

TLDR don't stay too long on projects or teams which aren't lucrative for the company, unless they are fun and you don't mind getting ejected from the company when cut comes.

Logic doesn't hold up. The same hiring practices you used to acquire "poor performers" (or culture to create them) are still in place.

This is one of the worst things you can do in a company. GE did it starting with Jack Welch and since then the company is not the same.

Why? What's wrong with firing people during other economic conditions?

Why would the paperwork be any different, whether it's a small layoff or a big payoff? Ctrl-C/Ctrl-V is cheap, Microsoft implemented it many times in many products.

It can be tedious to fire people. I know a manager at MS that has been struggling with a terrible performer for over a year. They are just now getting to the point of going through the processes (first gotta do RCA and try to fix etc) and having a paper trail down with HR to be able to fire them.

> What's wrong with firing people during other economic conditions?

Layoffs have a huge psychological impact on the people who didn't get cut. If you do layoffs at a time when the economy is booming and jobs are easy to find, you risk losing your best performers who don't want to be at a company that fires friends of theirs.

It's easier to fire people when jobs are scarce and people are already spooked and disinclined to try to switch jobs.

Firing IC's at large corporations usually involves some sort of a individual coaching/PIP plan. This takes time for managers and HR to write and implement, takes N weeks of observation, and creates nervousness in coworkers who think they might be next.

Much easier to do a Thanos-style snap and get rid of X% all at once, with no pre-warning or reasons required besides "challenging economic conditions".

Humans fire other humans. Layoffs allow for severance and unemployment, which can make the pain of firing someone and all the externalities that come with it far easier for a boss to swallow.

If you heard Microsoft just did 11k layoffs and then you got a job offer from them how does that sound to you ? To me it sounds like I could be in the next round if I get hired on the wrong team.

I declined an offer from Microsoft late last year, in large part because of earlier layoffs. I am sure I was not the only one.

I imagine it's three things. First and foremost, interest rates are up. Some development opportunities only make sense when loans are basically free. Second, the market's down, firing a bunch of people is a good way to boost stock prices in the short term, and people making these decisions are often primarily motivated by short term stock price gains. Third, big tech executives are heavily influenced by trends, they all talk to each other, and layoffs are trendy right now.

Layoffs are probably a bad idea, in general, given how expensive it is to hire new devs and bring them up to speed, but on the other hand, it's probably a pretty good way to eliminate orgs you wanted to get rid of anyway while blaming the economy. I'm sure it's not a coincidence that so many of Amazon's layoffs came from Alexa.

Assume a constant need to fire a decent chunk of the company.

If you fire when everyone else is hiring, the market asks you if your growth prospects have dimmed.

If you fire when everyone else is firing, the market says you're being financially responsible.

> Assume a constant need to fire a decent chunk of the company.

Why?

If you are so good at identifying poor performers, fire them, and reap the profits of being leaner, more effective organization.

"The market" is a boogeyman used to rationalized everything.

Because every time you want to build a new product you risk that no one ends up wanting the product, or not enough people to justify keeping it going. Alternately once you have depleted all of your current ideas you don't have anything productive for those people to do.

I think people over focus on poor performers when in reality layoffs are a great chance to get rid of teams and departments that don't make economic sense anymore.

Well if you’re not hiring, your competitor is picking up the talent

Plus the more people that you have, the faster you can get competitive products out to market

Could be a damned if you do, dammed if you don’t situation

> Plus the more people that you have, the faster you can get competitive products out to market

This is not always true. Do you have citation to back this up?

Yeah, effectiveness is something too in monopoly tech firms. The Mythical Man Month https://archive.org/details/MythicalManMonth Steve Jobs on product dev vs marketing teams https://www.youtube.com/watch?v=P4VBqTViEx4

Well I said “can.”

It’s not always true but you can’t do the work of 6 people with 2.

I’ve definitely been on teams blocked by the number of people where getting even one more QA person sped things up a lot.

If you rephrased to say you have more opportunities to take more bets.

I've been privy to execs sharing the "why" for stacked ranking, open plan, layoffs, and various other decisions. If you had some naive belief in the efficacy of capitalism or the idea that CEOs are highly paid because of their brilliance you'd be very disappointed to discover how often the answer is "we're doing this because other companies like us are doing this", or "because an analyst told us we should do this".

If people were paid by brilliance most celebrities and politicians would be poor and mathematicians would be billionaires.

The world doesn’t work that way.

I think the overall spirit of your argument is true, but I think you define brilliance too narrowly with saying it primarily applies to mathematicians.

IMO, cheap capital meant companies could take "dumb" risks. Now that interest rates are going up, they need more plausible returns on investment.

Maybe they're doomed to follow the footsteps of their predecessors, IBM, HP, Cisco, Nortel, Dell, Intel, etc.

Just last week MSFT nixed the accrual PTO benefit employees enjoyed and opted for the rouse of 'unlimited' PTO. Effectively, ending a liability/cash outlay they would pay when folks quit, or get fired. I hope those who were affected today receive severance that makes up for them losing this benefit.

-James

My understanding is that the way they converted to unlimited PTO was by paying out people's vacation time with a one time payout.

In which case, they didn't lose benefit at all

They lost it going forward, and also lost any kind of arbitrage when paired with salary increases. Eg my accrued vacation is “worth” 10% more after a 10% salary bump than before it.

It also serves as a nice buffer when you are switching jobs - you can take the PTO and still be employed (& so covered by health insurance for a bit longer, and stocks are still vesting), making for a nice break from work.

The payout will be in the April paycheck, but hopefully the layoffs will get it at layoff time.

When my company switched from accrued to unlimited PTO, the way they did it was to tell everyone that until their balance got down to zero, they needed to report their time off. So if you quit before you got your balance down to zero, you had it paid out, but most people probably just burned through their balance within a year or so and the liability was gone.

Wow, that’s shitty. Because you could simply have taken the same time off under unlimited PTO as by burning down the accrual, the company effectively zeroed out accrued vacation time. I’d be pissed that happened to me.

I had a friend who actually took the “unlimited PTO” thing at face value when he was fresh out of college and joined a cool tech company. He was literally traveling every 2-3 weeks and bragging about it. He was let go for performance reasons within 6 months lol.

All accrued vacation balance got paid out when Microsoft made the switch.

payout will be in April's paycheck. I was a little surprised about the difference on when the accrual stops (mid Jan) and when balance will be paid out - in April. Laying off people before April payout explains some of this difference (maybe all?).

> Effectively, ending a liability/cash outlay they would pay when folks quit, or get fired

This was effective yesterday, and they paid off any remaining pto balance. I initially thought this would be an employee retention effort in the midst of low promotions and raises, but in was probably wrong. I don't know what gives.

> The company had 221,000 full-time employees, including 122,000 in the United States and 99,000 internationally, as of June 30, according to filings.

The size of these organizations always catch me off guard. 11,000 is a huge number but 221,000 is even more staggering!

Now add in part time workers, contractors, and contracted-out workers like cleaning staff that are still required, just not counted as FTE. Would be interested to know those numbers too, and... are any of them being affected as well (assuming so, but it'll be accounted for in various other ledgers).

Between 2020 and 2021 they grew by 40k. 11k doesn't seem that much considering.

Historically (not sure if still true), Microsoft had top tier profit:employee.

They're likely still up there.

https://www.wolframalpha.com/input?i=Microsoft+vs+Apple+vs+G...

They're not the best best, but $919k/employee/year is impressive. Google is at $1.5M/employee. Apple is $2.4M/employee and Netflix is $2.7M/employee.

(and to the dead comment reply claiming $10M/employee for Musk companies)

Tesla: $158,613 https://csimarket.com/stocks/TSLA-Income-per-Employee.html

SpaceX: $210,526 https://www.zippia.com/space-exploration-technologies-career... (though https://en.wikipedia.org/wiki/SpaceX would put it even lower)

Starlink: (I can't find any reliable 'how many employees'; crunchbase has it at "1-10")

Looks like for the tech companies this is revenue per employee, and not profit per employee right?

Then for Tesla, it would be $754K in an apples-to-apples comparison. I can't find any info for SpaceX though.

Meta is at $1.64M per employee btw, roughly similar to Google. Didn't realize Apple and Netflix ratios were so much higher.

Source for Tesla and Meta: https://www.wolframalpha.com/input?i=Microsoft+vs+meta+vs+te...

Good catch.

Tesla:

number of employees: 99,290 ( https://www.macrotrends.net/stocks/charts/TSLA/tesla/number-... )

revenue: $74.863B https://www.macrotrends.net/stocks/charts/TSLA/tesla/revenue

And that gives us $753k/employee - in agreement with your number.

---

SpaceX:

Number of employees: 12,000 ( https://en.wikipedia.org/wiki/SpaceX )

Revenue: $2 billion ( https://www.cnbc.com/2019/05/20/spacex-revenue-2-billion-fro... (estimate) )

And that brings us: $166k/employee.

That is revenue/employee, not profit/employee.

Numbers here are significantly different:

https://moneytransfers.com/news/content/meta-platforms-profi...

So this looks like true profit-per-employee ratio, the OP is revenue-per-employee ratio. I would expect companies to rank differently based on how profitable they are vs how much total money they are making.

E.g. one big outlier is Amazon, huge revenue income from retail, but close to zero profits.

I think Starlink is still part of SpaceX for now, so it's already counted there.

11,000 people - let's say an average loaded cost of $250k/yr. That's... ~$3b/yr these folks cost MSFT. Granted, it's per year, but ... keeping these people on for another 3 years would cost ~$10b.

MSFT currently have $100b cash on hand. It's gotta be a little... frustrating to get be part of a 5% cut when there's so much free cash sitting around. I know, it's a narrow view of corporate finance, and I don't have the 'big picture', but... still doesn't sit right with me.

That said, I don't know what severance packages people are being offered. That might help soften the blow for some folks.

EDIT: re one reply about people earning $250k. I indicated 'loaded cost' - health insurance, likely some cost of options/stock, retirement matching, FICA and more. I possibly could have removed 'average'. I suspect many of the folks being cut have on paper salaries (well?) below $200k. Is the 11k number global or US only? Round the number down to $200k. It's closed to $2.2b/year then.

It's silly to mention the cash on the balance sheet without also mentioning the debt of $77B. In reality, the net cash position is on the order of magnitude of $30B which puts a much tighter perspective on the impact of this cut. 40% of all public companies created since market inception in 1871 have gone bankrupt including many of the bluest of the blue chips. Complacent thinking like this is often the reason. Additionally, if you've ever worked at a large company, you can see first hand at how much bloat there is.

A lot of the bloat is at the top. How many executives, VPs, directors, high level managers, etc. are part of this?

Generally layoffs include management cuts as well.

There are far more employees than executives, though. Think about how many employees are in the org chart under a single VP.

Numerically you can’t get appreciable cost reductions by reducing management alone.

Bloat can be all over the place, it’s not exclusive to the top of org charts

Bloat at the top, whether people, process, or organizational bloat, has an amplification effect that isn’t found at the bottom.

classic IC answer

source: I'm an IC

Is there a position there?

Those are the people making the layoff decisions...

prbobaly not a whole from the layoffs i've seen at 2 of my employers.

That's fantastic debt though, at presumably low interest rates. A dollar in my pocket today is worth way more than a dollar in debt at 3.0% interest or less. You can't subtract debt from cash on hand and get a usable value, they're different types.

Could you clarify what you mean about the dollar in your pocket worth more than debt at 3% interest?

In corporate finance net cash or net debt is indeed standard practice (cash on balance sheet less debt on balance sheet). It sort of helps understand how much cash is ‘available’ to give back to investors, or pay down debt, spend on R&D, etc.

Now since most of MSFT’s long term debt matures in 2027 or after, you could argue that there is not much cash need for debt repayments in the near term. On the other hand, cash flow from operations was down year over year in their last reported quarter so belt tightening is probably needed to reverse that trend.

> In corporate finance net cash or net debt is indeed standard practice (cash on balance sheet less debt on balance sheet). It sort of helps understand how much cash is ‘available’ to give back to investors, or pay down debt, spend on R&D, etc.

I'm not a financier, but isn't "available cash" the amount left over after subtracting the amount needed to service (rather than clear) the debt?

That's exactly what a balance sheet does. Offset assets and liabilities.

I would think the figure of public companies gone bankrupt to be much much higher over that long of a time frame.

> would think the figure of public companies gone bankrupt to be much much higher over that long of a time frame

Bankruptcy is a symptom of leverage. Companies more and more fail by being acquired into oblivion. (It's also common for a dying industry to consolidate until its last gasp.)

There are other exits besides bankruptcy, I think a lot of companies kind of whimper into near bankruptcy and then sell to others or just cease operation without bankruptcy, would need to get actual data, but that is my speculation.

Acquisitions mask a lot of it.

Its why almost no YC companies have “gone bankrupt,” someone one will usually pay a nominal amount “for a team” and founders are happy for the soft landing.

That debt is likely just leveraging OPM though.

Why would they spend any amount much less $3b or $10b to keep people they don’t need/want?

Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent and require much more than just laying off the unneeded workers. It would suggest that large reforms are needed in planning and hiring. But these days it's just dismissed as an "oops!".

They wanted 11,000 extra heads when the market was rewarding growth.

Now that the market is rewarding bottom lines - they don't want 11,000 extra heads anymore.

It's easy to "blame the Fed" for the market rewarding the bottom line. But we forget that the reason the market was so crazily rewarding growth 2 years ago was also... because of the Fed.

For one, in many many companies layoffs start in HR/hiring themselves. If MS needed to hire a ton of people in 2020-2022 it’s not at all a sign of incompetence if they hired a lot of recruiters/other HR folks in that time to handle it, and then spin it down when they aren’t as busy hiring.

The same goes for marketing. If you are going to reduce your marketing spend you don’t need as many FTEs to work on it.

For engineering, MS is a lot more old school than some other tech companies. Internal transfers basically require re-interviewing, and a lot of people don’t have many transferable skills. MS could be better off (and employees even better off) if they directly laid off e.g. engineers working on Windows LTS rather than trying to find them roles in Bing.

Not saying layoffs are ever good, and the details of this one remain to be seen, but I don’t think a 5% layoff signals incompetence

There's nothing indicating that they hired 11,000 people they didn't need. Many of the people being cut have probably been there for a while but may no longer be needed. The article mentions HR staff being laid off which makes sense since the hiring boom in tech has vanished. I don't think you can draw any conclusions about bad management or mistakes from this, the economy and the tech sector are in a slump with practically every large employer trimming fat. This is just business as usual.

Or, it means that they didn't forsee the economy going down to the extent it has. Corporate finances work like any large investment company. How much cash do you have on hand, how much is it earning per year, what is your revenue.

If you suddenly are getting 10% less from investments and possibly less from revenue due to a severe economic downturn, then you need to save 10% in costs somewhere, and for tech companies people are always the biggest cost.

There is no conspiracy here. You may wish that these large companies would have seen a recession coming, but that's not a very realistic wish.

> Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent

Not really, Big Tech was in an 'arms' race the last decade where they felt if they did not hire people the competition would and they would be worse off in the long run. They all did this. Hence why everyone is trimming the fat as soon as the bubble showed an inkling of popping.

Everyone over hired, over paid, and didn't innovate with it enough to make up for the spending.

There are tons of people at these companies that can be let go.

They clearly did need/want them at some point. And then things change.

“When the facts change, I change my mind. What do you do?”

"Management should plan ahead."

*Microsoft lays off 11k in lead up to recession

"No, not like that."

I don't think there's any grand scheme to screw anyone over here. Growth was important and now the balance sheet is more important.

We could always start talking about tech unions and guaranteed severance packages and other employee protections but it seems silly to just brood about 'the management.'

> Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent

Sure, but 2020 and 2021 were extremely abnormal. The pandemic triggered a huge shift toward remote work and online activity, which resulted in revenue growth for MSFT, and it was hard to predict the extent to which that would continue after things returned to normal.

A company that can't figure out what do with employees is just as much a warning sign.

It's a bad signal that Microsoft can't think of any development worth doing.

no hiring process hits 100%. a healthy company deals with that reality incrementally. since many companies have adopted a policy of just generally not firing anyone for performance reasons, they just accrete these people, and when the opportunity arises (i.e. merger), they vent them en masse. I guess its easier to deal with the emotional/morale issues? probably legal too.

You're thinking at a corporate efficiency level, which is why shareholders want layoffs.

To an individual manager, their pay is generally proportional to the number of reports, so the incentives are for them to hire.

The point is that yesterday, they did want/need these people. To make a broader point, when money was cheap all the tech companies expanded to use cheap money to make bets that would grow their revenue. Some of these were speculative, some of these were ill thought out. In the same way that some companies started stupid projects during the cheap money era (meta, I'm looking at you), there will be companies that cut good projects now that the markets are demanding efficiency. The ideal company doesn't start doing stupid stuff during the cheap money era, and continue to invest when rates go up, safe in the knowledge they're confident that their bets will pay off. The problem is CEOs are following the market, rather than making real decisions for themselves, which kind of makes you wonder... weren't they meant to be getting paid 399x the wage of the average employee because they're the best and the brightest, not just following the crowd. But they aren't the best and brightest and they are just following the crowd - which is why they're going to fire a load of people, because we pay them because the buck stops with them. And by them, I mean them firing us.

The buck stops with them because they keep on raking in the dollars, unlike the people they fire.

> Why would they spend any amount much less $3b or $10b to keep people they don’t need/want?

I understand that HN is a US-centric forum, where neoliberalism dictates the baseline and the interpretation of all things in life is reduced to a simplistic transaction in a theoretical free market.

However, society is comprised of people with family and a personal life and hopes and dreams and aspirations. Hiring someone has a profound impact on their life, and firing them moreso. There's the income aspect, but also the impact it has on where a person can live and consequently all roots their family have in a community. Hiring a person entails a tremendous social responsibility, and moreso firing them. Microsoft has a hefty amount of immigrants from all corners of the world, and some who have visas that limit the odds they can stay even in the country, let alone their community.

It's deplorable how a company can toy with someone's life like that just because some exec feels like it.

This is an uncharitable take. The ability to fire at-will is the reason companies in the US are able to hire and pay as high as they do. As a dual-national Brazilian-American who has also spent years living in Europe, the social contracts are very different, and different people might value different things, but I'll take the downside layoff risk in exchange for upside in pay and mobility.

Dont know why this got downvoted. HN to toilet.

> I understand that HN is a US-centric forum, where neoliberalism dictates the baseline and the interpretation of all things in life is reduced to a simplistic transaction in a theoretical free market.

The only reason Neofeudalism didn't quite arrive is that its difficult to get rid of unprofitable serfs. A lord was actually sort of responsible for his territory.

Here you can dump unwantes on the state and voila, no responsebility!

Is it neoliberalism specifically, or even just generally living in a capitalist society? (Which hey, I'm happy enough to live in a capitalist society, it has been good to me, but I definitely notice myself evaluating nearly everything through a financial or transactional lens).

The linked article gives no more information than "Sky news reported this, citing sources."

Microsoft employs a wide variety of people, not just developers, and a lot of those jobs aren't making nearly as much as $250k/yr, nor are they so easily rehired into a job somewhere else.

I added an edit to round down. Again, I used $250k as a loaded cost - benefits, stock options, IRA matching, etc. Someone on $125k year might still 'cost' an extra $40k, and ... the $250k was possibly on the high side - round down to... $200k, and the argument is now... $2b/year instead of $3b. And yeah, many of these folks may have a harder time finding an equivalent paying engagement (perhaps you'll have to move? hard on people with families, etc).

And not just in the US.

> MSFT currently have $100b cash on hand.

Fwiw, unless cash on hand already accounts for it (I don't think it does), then $70B of that is tied up in the Activision acquisition. Thus we really only have $30B cash on hand, which in a higher than previous interest rate environment is probably not great (though afaict Apple has $48B). Likewise, our cash on hand has been drastically dwindling the last few years, making the $30B total seem a bit more precarious.

I have suspicions that the Activision acquisition is a huge part of the hiring freeze at Microsoft and the source of a lot of budget concerns and constraints. It's pretty frustrating watching all the freezes seemingly because of this one acquisition (as an employee without any inside knowledge about this).

They haven't said so yet -- perhaps they'll clarify on the call tomorrow -- but they'll probably take down new debt to make this happen; it's a good time to go to the markets, and a lot of their cash is parked overseas. Fitch recently announced they're withdrawing their ratings for MSFT debt, so that's probably an indication they expect a significant amount of the purchase price to come from new issuances.

I had seen someplace else that there's... $107b as of last quarter, but it was down 17% from year before same quarter, so yeah, it's draining some. But are they really putting $70b down in cash for Activision?

I really, really doubt that acquisition is 100% cash.

Also pretty disconcerting that they're doing this at the same time that they're pumping billions into OpenAI (a company with near zero revenue) at a $30 billion valuation.

I hope you keep your Uber drivers, Landscapers and Cleaning Ladies on retainers because you have so much cash in your brokerage/bank account

This is..not a bad idea? I know several people that kept paying their cleaning people during COVID despite them not being able to come, because they were remote workers and could easily afford it.

It's called noblesse oblige. People with means in their daily lives constantly make financially unsound decisions out of a sense of duty and responsibility.

That microsoft is cutthroat here, sure, it is the nature of transactional corporate relations, but it would be a sad, ugly world if individuals internalized this same dehumanizing ethos in their personal dealings.

I paid our cleaners during the first months of covid despite them not coming over... we've been using the same few people for almost a decade now. All the restrictions our governments created really fucked over people like them.

I don't uber/lyft, and I don't have cleaning staff. I do keep the lawn company coming, without too much respect to the amount of savings I have. There was a time when I didn't, but... if keeping these extra services amounts to less than a single percent of my cash on hand, I'll likely keep them going.

My roommate and I literally kept our maid on retainer during COVID when she could not come.

Unless they're laying off 11,000 developers and managers the loaded average is probably even less.

Re: the "loaded cost", back when I worked for MSFT in the early 2000's, the rule of thumb for management was $250k per person total cost. This is when $125k was considered a pretty good SDE salary. So I'd double your $3b.

Yes exactly. There is much more than just "benefits". Cost of office space, computer equipment, office supplies, electricity, janitorial costs, heating, security, servers, IT overhead, etc. When you take ALL these costs and spread them over the company, the loaded cost of an employee is not "mostly" salary.

It boggles my mind that people will work hard for an employer. You care about you less than a used napkin.

There's no shame in working hard at your job or getting a sense of satisfaction from writing programs to move 0s and 1s around, but I sometimes forget that my employer at the end of the day really does not personally care about me.

Always good to keep this in mind.

We don’t do it expecting love in return - we get a paycheck every two weeks

I work hard for myself not some employment ideal.

> frustrating to get be part of a 5% cut when there's so much free cash sitting around. I know, it's a narrow view of corporate finance, and I don't have the 'big picture', but... still doesn't sit right with me.

nobody is entitled to be an employee, the purpose of corporations isn't to print employment numbers, these observations you made should be unrelated

Capitalism is a failure. Everyone should be entitled to money.

Let's say you're within the ballpark.

A three year savings of $10B would be equal to their stated investment into OpenAI. Assume there is a global slowdown, and a corresponding decline in revenues; layoffs may be the way they've decided to free up cash flow to pay for the investment.

Companies that think that way wouldn’t get to the point of having that kind of cash.

Furthermore, efficiency only increases in importance as companies grow.

It's worth noting that many companies have cash hordes outside the US but need to make payroll inside the US. https://www.google.com/search?q=microsoft+repatriated+cash

It makes me wonder if they ever allocated money on a as-needed basis. Are they hiring across the board the way they are laying off across the board? Because then their hiring practice makes about as much sense as their firing practice.

They must be looking at the recruitment cycle as a cyclical process.

They also want to spend $68b on Activision which might put a bit of a dent in that cash hoard.

You are also forgetting these people arent sitting on their asses! On average they are at least making the company that much in revenue no? Being unable to deploy them to good use is truly a leadership incompetence!

In aggregate, employees make a company money. That much is trivially true. At the individual level, one can be a net gain, net loss, or breakeven. I often wonder how skewed this distribution is at some companies. Ideally you trim the ones that are a net loss and thus on average aren't making the company money. Whether or not it's obvious who those people are isn't known to me. Anyway, I don't think it's a good assumption that the people being laid off are making the company money on average.

MSFT seems to be willing to invest $10B in OpenAI. It's not clear how they'll make that money back as OpenAI hasn't done much to monetize things like chatGPT.

You can double those numbers if you consider all additional costs.

Microsoft, Apple and Alphabet are sitting on extremely profitable businesses and huge piles of cash. (Other megacaps like NVDA, Meta, NFLX, maybe less so.)

So far we have not seen much in the way of the highly-anticipated earnings decline, and the current projection for Q4 GDP is around 4% growth, which suggests to me that Q4 earnings should be better than anticipated by the pessimists out there.

I would see this as a relatively painless opportunity to cut out low performers. Sure it sucks for those who are being cut, but my experience working at a FAANG tells me there are a lot more than 10% who contribute very little.

> I would see this as a relatively painless opportunity to cut out low performers.

As many other comments have pointed out already, that's not how mass layoffs work in practice.

Corporate excellence programmes are about removing the bottom 10% of performers. However most mass lay-offs aren’t about that kind of performance, they are the answer to the question asked by the buy-side analyst: “If companyX spends 5% on areaY, and you spend 7%, where’s should I look for the benefit delivered in your results, because I’m not seeing it.” I’ve been there.

Indeed. What is also not understood, company performance is not a result of individual performance, any more than efficiency of your car is a result of quality of steel used to build the body of the car.

Incorrect organisation and priorities will absolutely waste the best individual performers, and lead them to depression to boot. Correct organisation can deliver results even from a mediocore team.

So one 1 out of 20 are getting let go. Looking around near 50 employee company I work for I easily see 2.5 employees I would let go just because they're near useless. Hell, I'd say it's at least 5.

I'd say unless you've got a good manager, really good hiring, and are keeping close tabs on the technical people (just to make clear, I'm one of them those technical people) I figure you've at least got 1 our of 20 you should just be sacking on principle.

This logic has a nice way of being used against you. I think the employees you feel are useless would sack you if they could.

Focusing on productivity is of course the right metric, but the metric that gets used in practice is “Which of you helped advance your manager’s career?” After all, your manager is the one who decides who goes, and there’s no incentive to keep someone that does nothing for them over someone who helps them look good to the VP — which is who decides whether your manager goes. Same rule applies recursively.

Eventually you'll run out of bad ones to sack and then the that's when the good ones leave because they don't want to play the ladder game.

You're left with middling who might have a hard time finding other jobs but could play the ladder game well enough - potentially with devastating consequence for health of the technical stack as more "features" get developed.

In my experience you’re right that the best devs don’t care to play the ladder game, but they’re generally pretty okay at it. It’s not that much of a distraction from your regular work to think about “How can I help my manager look good to their manager?” which is all the ladder game is.

You'll say this until you are the one let go. Companies are irrational and layoffs of this scale are not capable of targeting the poor performers.

At least you have actual skills to find a new job.

Well, yes and no.

The skills one develops on the job and the skills one needs to actually perform well at a job are not really tested well by the standard big tech interview loop (startups can be innovative here, but it can go either way).

Generally the competent folks reluctantly acquire the silly skills required to pass through the gatekeepers though.

Except that mass layoffs dont work that way. They're culling products and branches, not individuals

I have a feeling Apple will be next - CEO announces he will be taking a huge pay cut in compensation was maybe an effort for him to preemptively show he is 'sharing the pain' (though 'only' 50M comp is not really much pain)

True, but didn't the amount of stock he took versus cash actually increase?

Could be wrong, probably am, but I thought I saw that his base pay dropped significantly but his stock options and grants were virtually untouched if not raised.

These layoff articles are incomplete without mentioning how many they hired and when. This brings Microsoft back to their staffing levels of when exactly? March 2021?

What’s the relevance of knowing a previous employee count? How does this information “complete” the story?

Because if they hired for instance 30 000 people the last two years, 11 000 brings them back a year or so. If however 11 000 is the headcount they've grown the last 10 years, it's a much more dramatic sign.

If your friend told you they lost $10,000 in the stock market today, would you feel bad for them? What if they then told you that they're up $500,000 over the past year? How about then?

Believe it or not, like the stock market, employee headcount doesn’t only go up, it goes down too.

This is a curious decision. Microsoft shows a ~73 billion dollar net income [0] and it's probably reasonable to assume their shareholders are enjoying a robust, growing business. I wonder what they believe this reduction in staff is meant to provide? Will this really and meaningfully move their bottom line or will it better tighten the performance characteristics of the staff?

[0] https://www.sec.gov/ix?doc=/Archives/edgar/data/789019/00015...

If you have 10k in your checking account and are saving an extra 10k per year, would you not cancel a $200/mo gym membership you don’t need?

By your analogy, the 11k laid off would need to be costing the company over $1.5m per employee on average. If we instead assume it's 300k per employee, it's more like a $40/mo gym membership.

> I wonder what they believe this reduction in staff is meant to provide?

An increase in profitability most likely?

If we can agree "you need to have + pay employees in order to deliver projects which grow revenue", I don't know how they expect to grow with "less employees" delivering on less growth projects?

> it's probably reasonable to assume their shareholders are enjoying a robust, growing business

I don't know what you mean by enjoy here, but shareholders generally enjoy it when stock price appreciates, which is not what's been happening the last 12-14 months.

It means more profit, even as the world undergoes "challenging times".

The execs must be doing a great job to have accomplished this. Let's give them some sort of bonus or promotion, when the time is right.

Not to offend anyone affected, but considering the cost/profit structure of those big companies has not really changed that much (except, maybe, Meta), I get the feeling, that this round of layoffs is in some ways welcomed by those companies.

In many cases, they are basically returning to pre-pandemic levels and instead of an actual financial need, these layoffs are probably a result of the fact that you cannot effectively incorporate an headcount increase of 20% in a high-tech company within 1-2 years. It seems like they hired to please investors because everyone else was also hiring like mad. Since the shareholder expectations have reversed, the companies are using the "opportunity" to return to manageable numbers of engineers and administrators.

This isn't a moral justification, but isn't laying off workers when other companies have layoffs a simple supply and demand response? That is, the demand curve is the same for these workers but the supply curve shifts to the right and prices for the same job drops. They're betting that the people hired in a recession will perform better per dollar than the people let go.

A layoff of ~5%, especially if it is the first one in a while, is usually (at large corporations) just a way to get rid of (perceived to be) non-performing staff without having to do as much paperwork as actually firing someone. This isn't to say they are correct about those 5% not performing, and even if they are it may not have been that person's fault, but the real motivation for a layoff of this type (first one in a while, less than 1 in 10) is usually just to get rid of people it would otherwise be too stressful/legally fraught to get rid of.

You’d wish, but in my experience individual performance is only a small factor in layoffs. In one layoff I survived, our GM (with 1000+ people) was told who was being let go a day before the event. That involved 100+ people. People with above average performance ratings were let go, some with below average ratings stayed. As best we can tell, HR went with laying off senior/expensive employees based on the lack of certain technologies on their internal resume. Of course, your best employees don’t update their their internal resume much, because they are busy with all the work being thrown at them. It was chaos.

I’ve also seen companies do layoffs by cutting entire teams. Top performer on a misaligned team? You are also laid off.

How old is your data on this? This is repeated multiple times in this thread, but my experience with layoffs hasn't shown that poor performers are cut. It's random or it's entire teams/orgs.

If you’re laid off from anywhere, are in a position to join a very early startup, love Texas Hold’em, and have technical or design experience, drop me a note.

https://mach9poker.com/

If you haven't done so yet, you should post in the monthly "Who's Hiring" thread.

Comments seem to be closed for January who’s hiring list.

I've survived multiple layoffs at various big tech companies in the 80s, 90s and 00s. I'm currently at Microsoft.

It's always a bit of a gut clench. Ugh.

What sort of system exists for these monster layoffs that they can just (relatively) quickly patch the hole left by removing 11,000 people? I can't comprehend what that looks like logistically.

My understanding is that this is a ~5% decrease in employees? Pretty easy to imagine losing 1 person in your 20 person department. Really depends on the "who", which tends to get lost in headlines consisting of large numbers.

It can be either (whole product/teams get cancelled) either horizontal (lowest rated 5%). Usually both, with the critical teams get extra headcount

Using employees as a profit buffer. Just another shitty way corporations work.

Somebody got a bonus for making this suggestion at Microsoft.

Im not sure I follow your thought process. Are you suggesting these employees would make Microsoft more profit YoY than laying them off when they are deemed as a cost center vs profit center?

Always remember: your employer doesn’t give one single iota of a fuck about you when it’s convenient to get rid of you.

How to interpret this? MSFT felt like stablest FAANG

It seems like they are just taking advantage of the climate. All of these companies are going to be "trimming the fat" while the news cycle is used to this category of headline.

They make a lot of money selling services to companies that are on shakey ground or pulling back their finances and spending. This means that instability eventually bubbles up to Microsoft and other companies depending on their customers to keep spending and buying services.

As an investor in MSFT, I would have a positive interpretation of this move.

If MSFT cuts big again next quarter, I will then begin to reconsider my position.

FAANG isn't a very good acronym if Microsoft is in it. GAMMAN would would better.

Microsoft had layoffs in 2008, so it isn't unprecedented.

FAANG is missing the M

Apple seems far more stable.

I feel similarly.

Granted that there are definitely people there resting and vesting and not contributing much. I get it. This still does not explain why all these big tech companies went on hiring spree when clearly they did not need that many people. And now they all: ops sorry, we did not know ...

I would like to see top managers bonuses/refreshes and so on trimmed and maybe fired as well.

Here's a dashboard we made keeping track of the economy. We're now at a higher number of layoffs in January than any month in 2022 except for November

https://app.plusdocs.com/startup-funding-/page/clcgzzo551257...

Do you add unconfirmed layoff reports like this one? I don't believe Microsoft has put out an official statement.

looks like it could be interesting but the charts come up crazy blurry on zoom for me in iOS

nearly 0 savings rate and all time low consumer sentiment. Hrm...

That's just the first wave out of three. The first one are with the most severance usually as there is still more cash in the bank, so even though it sucks to get laid off you can look at the glass half full. Be strong everyone there!

How do layoffs like this happen? Every team cuts 5%? Wholesale elimination of teams?

Both. Teams that haven't gotten exec buy-in just get axed (with lots of good people) and then every Director is required to sacrifice a few people (in this section, most of the people laid off are low performers, but definitely some good performers who have made the wrong enemies or haven't made the right friends).

It varies. I was at MSFT during the 2008 layoffs.

My division fired a few percent of people.

A friend's group had a "We're firing everyone in Redmond who works on this team and consolidating in Hyderabad."

Member when Carly Fiorina shut down HPs calculator division because it wasn't PROFITABLE enough? Pepperidge Farms remembers. It's not enough you make a company profit, it depends on the quality of that profit to the stock to determine if you are worth keeping around. There are some seriously broken things about that and about our modern economy.

Just some initial Googling shows they had roughly 144K employees in 2019 and ~221K in 2022. If you take out 11k, they still added 66K jobs in 3 years. I'd be curious to know the breakdown of the kinds of jobs they added vs the ones they're now eliminating. The article says this cut affects mostly HR and engineering, but doesn't give exact numbers, and it is hard to tell the breakdown for jobs added (unless someone smarter than me can find the info in the public filings).

I would guess there's some correlation to a boom in O365 because of the pandemic. Companies that only gave licenses to some employees expanding it to all employees to handle remote work, company-wide events, etc. And now a plateau in that reached sooner than MS expected.

unlimited time off plot twist

I was wondering to which year of employment level will all the lay-off roll back. For instance, FB has the same number of employees as they did back in Jan 2022 after the laid-off. Let's say the employment level went back to 2018 for the tech industry, would it be a bad thing? The packages back in 2018 were still pretty cushy.

Pretty sure these layoffs are due to the rule..

"There are three ways to make a living in this business; be first, be smarter, or cheat. Now, I don't cheat. And, although I like to think we have some pretty smart people in this building, it sure is a hell of a lot easier to just be first."

"Engineers not affected! /s"

Like I said before, no-one is safe. not even the FAAMNG companies.

Agreed.

As an aside, these tech sector acronyms have gotten ridiculous.

The G should really be another A, and the F should be an M... pretty soon will be MANAMANA

FAGMAN works just fine.

You're the least safe at the companies that have the most money, because those are the ones that overhired.

On a seven person team just merged into a 200 engineer company and we’re responsible for a third of the revenue, I’ve never felt so safe. (Shame that also means everything else about the new company sucks.)

Microsoft has been bribing enterprise executives with jobs, as part of their sales process.

Is it the staff of the Teams team? Worst product ever. One can't even as a logged in user click on search results within the app without going into login hell.

Yes, Teams sucks. But (from my anecdotal observations) it's pretty popular. And in my opinion that's mainly because many companies decide: "meh, it's good enough, and it's easier (for accounting dept) and safer (for risk dept) to go with Microsoft, than to go with Slack / Zoom". Plus I'd say quite a few companies migrate to Teams from WebEx, which sucks way more, so hey, it's all relative.

So, in conclusion, Teams is probably a decent revenue earner for Microsoft at the moment, therefore I doubt that the Teams team will be hit too hard by this round of layoffs.

Does Microsoft still do stack rank layoffs every year?

Possibly a purge of the people who predate mobile.

Well, this is a pointless move on their behalf.

How many employees did Microsoft add since the beginning of the pandemic. I know there was a lot of hiring during that time.

1. Too many humans - decision-making is slowed down & and it's expensive

Cut half - faster decisions, more money. Will you have more problems, Yes. But you'll never know how bloated you were till you get lean again.

2. Too expensive humans

Most developers at FANGS can be replaced with mediocre devs in iowa or India. They will cut high-priced salaries soon and replace them with entry-level talent.

> Most developers at FANGS can be replaced with mediocre devs in iowa or India. They will cut high-priced salaries soon and replace them with entry-level talent.

Software companies have been trying this for 30 years and it has never worked.

Reminds me of the LayOff Microsoft did in Q4 of 2014 where they laid off 18k

> human resources and engineering divisions,

No lobbyists? Why am I not surprised.

honest question – Is this the danger of overpaying engineers $200k+ salaries?

It's hard not to read some of these stories and not think that somehow some of these companies are free-riding on the ability to do some firings with minimal pushback because of the "well, look at what everyone else is doing!" climate that exists now. I'm having a hard time teasing out how much of this is driven by some sort of fundamental analysis of the economy, some collective BigCo CEO shared thinking, or, at my most cynical, an Overton window that's been pushed outwards by Elon firing an extremely significant quantity of the (comparably tiny) workforce of Twitter with seeming negligible external-facing impact on the core product.

> with seeming negligible external-facing impact on the core product.

Twitter is said to have lost $2.5 Billion/year in advertiser money, largely because Twitter's sales teams have not been returning emails from worried Advertisers. That's a pretty huge impact on Twitter's #1 revenue stream (estimated to be $5 Billion in 2021).

Twitter's core product is advertisements. Without sales staff to keep the advertisers, they're clearly losing a ton of money.

Advertising was always degenerating. I know that over the past year, I've been seeing more and more pornographic material in Twitter, and I'm pretty sure advertisers don't like that kind of stuff. But instead of having teams working out those kinks (pun intended), those teams have been simply fired.

So advertisers know that there's no hope for these issues to be fixed anymore, and are now leaving the platform. There's simply not enough developers left to change Twitter or combat the rise of unsavory material.

---------

There's been many a blogpost about "Airline advertiser didn't want to have its ads appear next to Airline disasters". (Ex: Southwest's shutdowns cause thousands of flight cancellations, it will be talked about on Twitter... does Southwest want its advertisements being shown next to that??).

These are the kinds of things that Twitter's teams worked to prevent. You know, mundane issues but require _constant_ coding to identify as news events cause a rapid change to the online discussion. And its fair: there's no reason why Southwest's advertisements should be shown in a negative light... or for Southwest to be paying for that kind of negative publicity.

Anecdotally, over the past few weeks the quality of ads I see on Twitter has deteriorated sharply. I used to primarily get ads from well known brands, but now I'm seeing ads for random products like rat traps.

> So advertisers know that there's no hope for these issues to be fixed anymore, and are now leaving the platform.

Having worked in adtech for a while the more likely scenario is that lots of companies have turned off their ad spend. That isn’t “leaving”, ad spend is volatile coming and going with many motivations is not uncommon. Pausing your campaigns because the ad publisher is a bit broken isn’t permanent.

And whatever is “said” isn’t to be trusted, you won’t get real numbers from a private company and rumors. No doubt there was a big dip around the takeover, but the only thing I’ve heard is a few people complaining about the increased number of ads.

Probably some advertiser tools were broken and the people who’d been talking to those advertisers had been fired, but those are all temporary. Advertisers aren’t going to take some great moral stand unless there’s a clear reason that can be traced back to customers, disliking elon isn’t one of those things.

Advertising revenue fell because of Elon's new "extreme right wing beyond conspiracy theories" stance. It is not because of the sales staff not responding to emails.

> there's no reason why Southwest's advertisements should be shown in a negative light..

So basically there's been a team suppressing any really bad news about any company who advertises on Twitter? Am I reading that right? And you want them back?

Interesting that Twitter is shipping features faster than ever after 80% layoffs.

Don't think Twitter's revenue issues have anything to do with sales staff. Advertising channels/campaigns can and should be 100% automated.

msft is a business..not charity.

my experience at two big tech companies said this extremely overdue.

especially since about 2012.. lots of added head count. managers and sr. managers and directors #1 priority on increasing head count to grow empires and get promotions. it elephant in the room supported by easy US fed policy. uncomfortable truth these people dont want to admit.

what is vision for these new teams? if stock price is $100/share does director X’ org contribute $.50 or $1 or $10? many teams are negative contributors to this equation.

actually much of $ attribution and downstream impact was gamed. the founders and their protege slowly left and replaced with professional managers. no vision. no obsession with features. little thought to value. instead they see prestigious job. “i have 150 people report to me.” that kind of discourse mainstream. indirect way of bragging “look how important i am.”

maybe 15% of employees at both companies providing actual value building new things that bring revenue. another 15-20% just support legacy cruft with software patches. no feature work. no innovation. large teams of engineers and managers resting and vesting.

it is honestly entitlement and horrible joke. why these people entitled to $200-500k+ salaries??? its like this country built fake economic class of worker. little to no economic output.

re >> #1 priority on increasing head count to grow empires and get promotions.

I'm sure that's the case always, but I'm convinced it's the case more often than many of us realize. I also recall this being discussed in David Graeber's book "Bullshit Jobs"

What are you getting at, exactly? Are you implying they don't need to fire these people, they just want to? Or are you saying they think they need it, but they really don't?

Firing a bunch of people impacts morale, PR, etc. So there may be a bunch of people they'd like to fire but not badly enough to deal with those consequences. But a public narrative of "it's the economy" or "layoffs are just going around" can shield them from those consequences and give them an opportunity.

What I took from it – and I think they might be on to something – is that it's opportunistic firing.

Firing people at this scale would have been pretty expensive just a few month back, PR wise. Right now, a lot less so. So you might be tempted to think of the current climate as a good opportunity to shed some fat, to the point where you go into it with the idea of hiring back right away and being able to do so at better conditions. The market has relaxed.

Compare it to a few month back, where switching jobs (= firing your employer) was a great way to automagically increase your pay. It works both ways.

He's implying that the company has some kind of duty to treat its employees like humans who would be adversely affected by being fired - or the company would perhaps suffer some PR damage from mass firings. But if everyone's doing it, it's a necessity.

I think he's suggesting that they want to do periodic layoffs regardless but that there may be a more negative perception of doing so in isolation rather than the current situation of multiple other big tech companies doing it.

The phrase "hard time teasing out" typically implies that the author doesn't know what to think amidst several options.

Isn't it obvious? They don't need to fire those people.

> seeming negligible external-facing impact on the core product

In both technical and product axes Twitter has already deteriorated massively, possibly beyond repair and the company might not make it to 2024, so I wouldn't call that "negligible".

Call me ignorant but Twitter seems no different from what it was a year ago. There has been way more media attention and pearl clutching since Elon's takeover, but that hasn't translated to noticeable a difference in terms of usability and product.

I've continued to use twitter daily since the Elon takeover. If I wasn't in the loop about that I wouldn't have noticed anything.

I think early on I heard there was a 2FA outage? That was resolved fairly quickly.

The only issue is dumb changes, like the "no linking to other platforms" rule that was announced and then rolled back within the day, or adding view counts that add no value. But none of that is technical issues.

In what regards has it deteriorated so much?

> so I wouldn't call that "negligible".

I think the mistake you're making here is assuming that your average tech CEO is paying attention to the same degree you are. They aren't. They don't have time to notice all the many little things that degraded already, they just saw that the site didn't go down a week later and moved on.

That's what some of these companies have stated on the record. Like Zuck explicitly said that some people shouldn't be here, months before the layoffs.

Or maybe it's some collective BigCo board of directors shared thinking that they need to show to shareholders that they are being proactive on that Overton window.

$MSFT ticking up ...

> some of these companies are free-riding on the ability to do some firings with minimal pushback because of the "well, look at what everyone else is doing!"

In finance circles it is referred to as “taking a big bath”. When everyone is doing it, you write off past goodwill from bad acquisitions, lay off redundant employees, etc, all to emerge clean on the other side. Having used the cover of everyone doing it, you aren’t punished.

Corporate Americas' bloat has been the butt of many jokes for decades. Big tech is just as guilty. They still do want to keep high performers, which is usually why its not just a layoff announced, but a "re-organization", aka lets move all the high graded employees to other orgs and fire the lower graded ones

Naw I think it's more "let's get rid of all these heavily overpaid employees and replace them with cheaper ones" :D

Especially the ones that spend all day bragging about how they're a top performer on hackernews. :D

It can be that but also it can be that they see some of the competition cooling so they don't have to spend as much to keep up with their competition.

It's like airline pricing. One airline has a sale, others follow (competition heating up), then, one airline hikes fares, others follow (as competition cools down).

In the current climate, layoffs are good for the share price and therefore the shareholders.

Sure leadership and deviation from the norm would be refreshing (and smart), but that's that the era we're in.

There was also the situation where companies were hiring simply so that the competition couldn't. Now that the competition isn't hiring, you can free the people you were hoarding.

It's hard to see how so many companies could grow their headcounts far in excess of their revenue growth, and people didn't see at some point, they'd start cutting.

> It's hard to see how so many companies could grow their headcounts far in excess of their revenue growth, and people didn't see at some point, they'd start cutting.

It's hard to separate the wheat from the chaff without hiring both and sorting after the fact when you're actually informed by experience.

The economic downturn just gives excellent cover for what's an arguably necessary part of a cycle akin to forests burning.

I assumed this was obvious.

Every Big Tech collects bad hires and these are the best times to get rid of them.

Why isn't "as soon as you know they are a bad hire" the best time to get rid of them?

people like to keep the bad hires around for when the CFO comes and says you need a haircut. it's kind of gross how many of these big corps work

Sometimes you can have an employee that just lacks motivation, and keeping them around while hoping to motivate them one day is cheaper/easier than finding a new hire, when hiring is super competitive.

MS may have less time/patience for these people right now.

It is, but it's difficult to do, needs documentation, etc., and most managers in Big Tech would rather not do it unless required to from above (which is what a layoff gives them the opportunity to do).

The overhead of managing someone out is far higher than that of a mass action laying off hundreds or thousands. I'm not saying I agree with sentiment.

There's very little incentive for managers to cut bad hires. It is a tedious process (involving HR, PIPs, lots of paperwork), and firing people always looks bad. Most will just choose to let them hang around and give them unimportant tasks.

Plus, when upper management mandates that you have to fire 10% of your org, well now you have all these people you can put on the list with zero impact to the product.

BigCo has a tedious process of getting rid of bad hires. Most managers are not going that path unless they are forced to.

I think that some companies buy up all available talent to deny their competitors hiring pool.

It depends on how layoffs function. "Hey, every line manager chooses their least productive report and fires them" is one approach, but the situation often doesn't seem to get pushed down that far. Directors axe entire teams not necessarily through some analysis of productivity.

Never let a good recession go to waste without firing people.

There was a

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