Here’s where Big Tech’s next layoffs might be, and when the cuts might finally end

The layoffs have hit Big Tech, as some of the biggest names in the industry, from Amazon (AMZN) to Meta (META) to Stripe, have cut thousands of employees.

After at least a decade of expansion, tech companies have been rocked by inflation along with a slowdown in advertiser spending. The ad-spend crunch has hit social media companies like Meta and Twitter hard, of course. Google’s parent Alphabet (GOOG, GOOGL) has also been hit in its latest earnings cycle, as YouTube missed sales expectations by a whopping $400 million.

In recent weeks, Facebook parent company Meta has laid off 11,000 employees, about 13% of its overall workforce, and Amazon has cut 10,000 employees, about 3% of its corporate workforce. Additionally, Twitter, now owned by billionaire Musk, laid off half of its workforce earlier this month, and a steady stream of resignations has followed.

Who could be next? The answer may be Alphabet, according to Joshua White, a finance professor at Vanderbilt University and a former Securities and Exchange Commission economist. White cites a letter activist TCI Fund Management sent to CEO Sundar Pichai this month, saying the company must take “aggressive action” to reduce headcount and payroll costs.

“Our conversations with former Alphabet executives suggest the company could be run more effectively with significantly fewer employees,” TCI chief executive officer Christopher Hohn wrote on Nov. 15.

George Washington University School of Business professor Chris Kayes points out that Alphabet insinuated months ago that it was considering layoffs. To that end, in September, Pichai said he hoped to make the company 20% more efficient, suggesting that that could include cutting headcount.

It’s not all that surprising, though. Alphabet has increased employee volume by just over 50% during the pandemic. According to SEC filings, as of March 31, 2020, the company had 123,048 employees; as at 30 September 186,779 employees.

Shares of Alphabet are down about 30% year to date, as of Monday’s market close. The company did not return a request for comment for this story.

So when does it all end?

Experts say the tech pullback isn’t over yet. So, what will it take to end the pain? In part, this is due to the Fed raising interest rates to bring down inflation. Tech companies have been particularly hard hit by the Fed’s aggressiveness, as the sector has relied on low interest rates for years to sustain growth.

“We know when it stops when the Fed starts to get dovish,” White said.

The holidays will also have an effect on how things play out from here, White added. A better-than-expected holiday season could cushion the effects of the challenging macroeconomic environment going forward. Ultimately, the next round of tech layoffs will depend on the severity of any downturn. Goldman Sachs (GS) recently expressed optimism about the possibility of a softer landing and Julia Pollak, chief economist at ZipRecruiter, said she expects tech growth to pick up where it left off once everything is sorted out.

“I think Big Tech will have a period of paused headcount growth, even a decline, but overall it will be a very slight decline and growth will pick up again,” he told Yahoo Finance. “The long-term trend is still toward more people having phones and laptops and consuming online entertainment and content… That long-term line is going up, but there will be some fluctuations around it.”

Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks.

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