IBM, SAP announce job cuts as tech industry slowdown continues

Yahoo Finance's Dan Howley gives an update on the latest tech layoffs hitting IBM and SAP.

Video transcript

RACHELLE AKUFFO: All right, well, moving to tech now, job cuts in the industry continue to mount with IBM, Lam Research, and SAP the latest to announce job cuts. Yahoo Finance's Dan Howley has the details. Hey, Dan.

DAN HOWLEY: That's right, Rachelle. We're seeing more and more job cuts from the tech industry. Obviously, it's already been stung by huge, huge pullbacks in jobs from the likes of Amazon, Microsoft, Meta. And now we're seeing them from IBM, though not as large as we saw from either Microsoft, Meta, or Amazon, which was in the tens of thousands. This is much lower. We're also seeing them from SAP.

And really, the big overarching kind of message is that, yeah, we hired too many people during the pandemic. We thought that this was going to be a new way of life. And so we ended up hiring for that. Obviously, that's not the case. People don't want to just be on computers forever. They want to be able to go outside and/or they just don't necessarily need to be on them so much. So now we're seeing these companies try to kind of course correct after making those enormous hires.

That's not to say, though, especially in the case of IBM, that they're not going to be hiring anymore. A number of these companies, there are hiring freezes at some, but a number of them will continue to hire in very specific areas, those being related to things like the cloud or heavy computing areas. So it's not as though there's a complete stoppage when it comes to hiring in these areas. It's just that they're trying to now cut back on what they did hire. And we had a chart a few days ago basically showing the percentage of workforces for different tech companies that were hired during the pandemic versus who were being let go now.

And it seems as though they're not letting go as many as they hired. So obviously, we can see here, Amazon with that 18,000, Alphabet with 12,000, Meta with 11,000, Microsoft with 10,000, and then you have down, down from there. But, you know, it seems as though this is something that is just going to basically roil the tech industry perhaps for the next few months.

RACHELLE AKUFFO: And as you are talking about, though, a lot of overhiring, but some of these big layoffs. Are we at the end of perhaps some of these major layoffs? We expect more to continue as we still then see people sort of shifting to different tech companies and rehiring them.

DAN HOWLEY: I think this is basically what we're going to have from the companies that have announced so far. Obviously, we have Intel announcing their earnings after the bell. There was some rumbling about them potentially having layoffs, as a result of the drop in PC demand. That's really suffered. People purchased their computers during the pandemic. They don't need to buy them again for perhaps another five years. So that's really hurting them a good deal. So I think we could hear something from the chip space. We haven't really heard much from there. We've heard that there are hiring freezes, or there are slowdowns, but nothing as far as layoffs. I think that might be the next place we start to see it.

RACHELLE AKUFFO: All right, well, thank you for that update there. Dan Howley there for us.