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Apple CEO Tim Cook unveils the iPhone 13 during an event in Cupertino, California, on September 14, 2021. Photo: EPA-EFE

Apple joins fellow tech giants in putting a lid on hiring amid recession fears

  • For now, most of the biggest tech companies are not talking about eliminating jobs, just reducing the rate of hiring, although Microsoft and Tesla have laid off workers
  • Amazon staffed up during the pandemic so it could handle a surge in e-commerce spending, but that has now left it overstaffed in its warehouses
Apple

Apple is the latest major technology company to rein in hiring and spending plans, adding to the evidence that even Silicon Valley stalwarts are worried about a recession in the coming months.

The iPhone maker is looking to limit expenditures and job growth at some of its divisions, Bloomberg reported on Monday, though Apple has not adopted a companywide policy. The more cautious stance mimics the approach of its tech peers, including Amazon, Alphabet’s Google and Microsoft, which have all taken steps to decelerate spending.

The news sent stocks sliding and increased trepidation surrounding tech earnings season, which goes into full swing this week. It may be difficult for companies to reassure jittery investors. IBM Corp posted better-than-expected sales growth on Monday, only to see its shares slip in late trading.

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For now, most of the biggest tech companies are not talking about eliminating jobs, just reducing the rate of hiring. And overall US job growth has not stalled. Payrolls increased 372,000 in June, beating the 265,000 estimate, with manufacturing jobs helping bolster the numbers.

The US added 25,000 information jobs in June, putting that category 105,000 higher than just before the pandemic.

But some tech companies are going as far as cutting jobs. That includes Microsoft, which said last week that it was eliminating some positions as part of a reorganisation.

The reduction affects less than 1 per cent of its 180,000-person workforce, and Microsoft still expects to end the year with increased headcount. But it follows a move in May to slow hiring at the Windows, Office and Teams divisions “as Microsoft gets ready for the new fiscal year”.

Last month, Tesla laid off hundreds of workers and closed a California facility devoted to its Autopilot self-driving technology, according to people familiar with the matter.

Google to slow hiring for rest of year, Alphabet CEO says

Chief executive Elon Musk said earlier that lay-offs would be necessary in an increasingly shaky economic environment. He clarified in a subsequent interview with Bloomberg that about 10 per cent of salaried employees would lose their jobs over the next three months, though the overall headcount could be higher in a year.

Former pandemic high-fliers like Netflix and Peloton Interactive also have been laying off workers in recent months. Netflix trimmed a few hundred jobs in June, and Peloton just announced plans to close its in-house manufacturing.

Facebook parent Meta Platforms has cut spending and slowed hiring for some senior-level positions. In April, the company announced plans to slash expenses by US$3 billion this year. The idea is to refocus Meta’s product teams on core priorities, like the metaverse and its TikTok clone, Reels.

Meta also halted development on one of its early smartwatch prototypes and repositioned its in-home video device, Portal, to focus more on business customers instead of regular consumers.

Last week, Google chief executive Sundar Pichai told employees that the company planned to slow hiring for the remainder of 2022 – a rare move for the internet giant, which typically adds tens of thousands of employees every year. Google will be focusing its hiring on technical and “other critical roles” through this year and the next.

“We need to be more entrepreneurial, working with greater urgency, sharper focus and more hunger than we’ve shown on sunnier days,” he said.

Other companies are looking to wind down ambitious growth plans without the need for major lay-offs.

Amazon staffed up during the pandemic so it could handle a surge in e-commerce spending. That has now left it overstaffed in its warehouses, but the company has said it is working through that problem with attrition.

In this file photo taken on May 14, 2022, Tesla cars sit at charging stations in Yermo, California. Photo: AFP

In some cases, Amazon is subleasing warehouse space and has paused development of facilities meant for office workers, saying it needs more time to determine how much space employees will require for hybrid work.

Amazon chief executive Andy Jassy said the company made the decision early in the pandemic to err on the side of having too many workers and too much warehouse space – rather than too little.

“We knew it might mean that we might have more capacity for some short period of time,” he said.

A key question during the latest earnings season is whether demand from consumers has softened. Apple warned in April that the latest quarter would be bumpy, but mostly because of supply-chain challenges.

Those problems are expected to erase as much as US$8 billion from Apple’s sales in the quarter. Investors should get a clearer picture of the damage – and Apple’s outlook for the coming months – when it reports results on July 28.

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