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What Big Tech layoffs suggest for the industry (blog.pragmaticengineer.com)

The article discusses the recent layoffs in the Big Tech sector and what it suggests for the industry in 2023. Mentioned companies include Microsoft, Google, Amazon, and Apple, highlighting the shift in hiring practices and the potential industry slowdown. The author provides insights on how these companies’ diversified business models and nimbleness in responding to market changes play a role in their strategies. The significance of not being heavily reliant on ad revenue is also discussed, comparing the business models of Microsoft and Amazon to Google and Meta.
Main Points
- Layoffs by major tech companies signal industry slowdownMicrosoft's announcement of eliminating 10,000 positions and Google announcing layoffs impacting around 12,000 positions signal a potential slowdown in the tech industry for 2023.
- Microsoft’s diversified business modelMicrosoft's diverse revenue streams, including Cloud, Office, Windows, Gaming, LinkedIn, and Ads, make it a representative model for the B2B tech industry, excluding advertising.
- Comparable diversification of Amazon and AppleAmazon and Apple have comparable diversification in their revenue sources to Microsoft, with segments accounting for more than 5% of revenue.
- Microsoft and Amazon’s minimal reliance on ad revenueUnlike Google and Meta, Microsoft and Amazon are not heavily dependent on ad revenue, with significant portions of their income coming from other sources.
- Big Tech’s nimble response to business slowdownsBig Tech companies are responding quickly to anticipated business slowdowns by freezing hiring, showing their nimbleness and data-driven decision-making processes.
- Expected correction in Big Tech hiring frenzyThe hiring frenzy of 2021-22 is expected to correct, with a reduction in hiring by Big Tech in 2023, as evidenced by the significant changes in the hiring market from Jan–Jul 2022.
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