Leaner but meaner? Global corporations axe jobs to correct ‘over managing’, save costs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In the latest upheaval, Tesla has announced a 10% reduction in its workforce globally. This announcement comes against the backdrop of a cascade of layoffs by major corporations over the past year and into this year, all in pursuit of greater flexibility and agility in what seems to be an unforgiving environment of high-interest rates, looming recession fears, and growing dominance of artificial intelligence.

The tech sector, for instance, bore the brunt of over 250,000 job losses in 2023, with industry giants like Alphabet, Accenture, Meta, Microsoft, and Amazon announcing workforce reductions. The trend continued into 2024, with 50,000 tech jobs slashed by March across major players.

Restructuring was seen across various sectors, with the likes of Apple, Amazon, Dell, IBM, Credit Suisse, Barclays, Spotify, Unilever, Disney, Novartis, and Mckinsey cutting jobs.

The buzzword among these global juggernauts appears to be ‘leaner,’ as they look to trim excess layers. Mark Zuckerberg, for one, articulated that the layoffs were aimed to make the company leaner, and more technically proficient to bolster business performance. Elon Musk echoed similar sentiments at Tesla, framing the layoffs as preparations for the next growth cycle, envisioning a leaner, more innovative, and hungry organization.

Similarly, most recently Bayer, with nearly 100,000 employees, unveiled plans to revamp its structure to enhance flexibility, efficiency, and innovation. This restructuring, which includes simplifying its 1,300-page rulebook, seeks to dismantle rigid hierarchies to empower employees and enhance decision-making.

While companies strive for heightened competitiveness, many decisions are also spurred by weakened financials. Tesla, grappling with intensified competition in the EV market, witnessed an 8.5% decline in deliveries in the first quarter.

While Bayer’s stock plummeted over 50% in the past year, burdened by litigations stemming mainly from its 2018 acquisition of Monsanto for $63 billion and a hefty net debt of 35 billion Euros.

Looking ahead, industry observers predict 2024 to be equally tough in terms of job losses, with AI as a major variable.

Reports indicate over 4,000 jobs have succumbed to AI since May last year and into 2024. Notable instances include Google’s workforce reduction by 6% in January 2023, driven by pressure from Microsoft and OpenAI’s offerings on its core search engine domain. More so, Google also cut ‘hundreds’ from its sales team earlier this year as its ad division transitioned to AI-powered sales.

On a similar note, software giant SAP unveiled a $2.2 billion restructuring initiative this year, slated to affect 8,000 jobs, as it pivots towards AI-driven business domains. Other companies embracing AI-driven restructuring this year itself include MSN, Ikea, Salesforce, and others.

Lastly, as uncertainties ranging from geopolitics to interest rates and AI continue to loom large, the trend of restructuring shows no signs of abating. With notable giants such as IBM, Dell, Vodafone, Mattel, and Ericsson, Nike already making announcements regarding job cuts this year, it appears that further reshaping across the corporate landscape is imminent.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow