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The big tech companies have been on a firing spree in the past six month. Google’s parent company Alphabet recently announced that they would be cutting 12,000 jobs globally, Microsoft has already laid off 10,000 workers, and Amazon is getting rid of 18,000 workers the largest job cut in the company’s 29year history.

Those are just the companies that are doing well… Facebook is laying off 13% of its workforce because their big play on the metaverse has failed to excite investors and then there is twitter which laid off half of its workforce and then hired some of them back and then fired them again.

Times are tough for businesses and executives are being pressured by investors to make cuts wherever they can. The easiest and quickest way for businesses to save on expenses is to cut out new projects and lay off the staff working on them. There three reasons that tech companies in particular hire so many people and three reasons why they fire so many people just as quickly.

The first reason they had so many employees to begin with is because the largest employers in the tech space have been on a diversification spree. The largest tech companies (with the exception of Amazon which employs a large amount of workers in its distribution centers) can run with much smaller crews than they currently do. Software is highly scalable, a single developer can produce an application that is downloaded by millions of people, which is impossible for any other type of business.

Compare a company like Meta to a Company like Walmart and the difference is clear, Walmart has a similar market cap but employs twentyfive times as many staff, mostly in it’s stores and warehouses across the country. The only other industry that comes close is the pharmaceutical industry with research and development teams that create medicines that can be mass produced once they get through the FDA approval process.

However, companies like Microsoft, Meta, Alphabet, Amazon and Apple have all hired a lot of extra staff that they don’t need to run their business. The biggest tech companies in the world are running into the problem of simply not having enough people in the world left to offer their services to. Meta’s stock price is currently down more than 50% from it’s all time high just eighteen months ago. The selloff began when the company announced for the first time ever that it had lost more users than it had gained in the trailing quarter.

Facebook is the most used social media network in the world with 2.96 billion active users as of the fourth quarter of 2022, but now anybody that wants a Facebook account has one, and anybody else either doesn’t have access to the internet, lives in a country where Facebook is not available or is simply not interested in joining mark Zuckerberg’s online social club. The growth of any company depends on being able to achieve one of three things. One, sell their products to more customers, two, charge their customers more for the same products, or three sell a wider variety of products to existing customers.

New consumer privacy protections, data storage laws, and advertising standards have stopped Facebook from being able to take this plan any further and the company is currently at the peak of what it can charge companies to run ads on its platform.

Meta has also been trying to grow it’s range of product offerings by developing new social platforms like the metaverse internally. The metaverse has been a multibillion dollar investment that involved hiring thousands of talented developers and engineers to build a unique but so far unsuccessful alternative to living in the real world.

Meta is not the only company that is constantly trying to diversify what they do, Google has dozens of programs working at any given time that take teams of thousands of engineers to work on and a lot of them won’t ever get brough to market. Other tech companies have similar side projects like AI which is an especially popular product right now that a lot of companies are racing to commercialize but they all required more employees.

So it’s time to learn how Money Works to find out why if hiring people is the only way left to achieve growth, why these companies are just as quick to fire them.