Mass layoffs through 2022 and 2023 are down to companies and CEOs miscalculating the long-term impact of the pandemic, according to Sasan Goodarzi, chief executive of software giant Intuit.
Companies had made the incorrect assumption that COVID-19 had brought about structural changes, rather than one-off, events-based changes, Goodarzi told Insider in an interview.
Intuit, which owns a portfolio of software products including email-marketing service Mailchimp, tax-filing software TurboTax, and credit service CreditKarma, had 17,300 employees, as of July last year, according to financial filings, up from 13,500 the prior year. A spokeswoman confirmed to Insider that the company has not conducted mass layoffs.
“When you see ads going through the roof, payments volume — that’s just two examples — some companies assume that is a structural change that will never pull back,” he said. “They then hired in sales, data analytics, engineering to support that growth into perpetuity.”
Now, companies that grew in the pandemic are seeing a slowdown. “They don’t need all that cost structure, that factually I do see,” he added.
During the first months of the pandemic, internet traffic surged as much as 60% in some countries, according to an OECD analysis. That translated to big boosts to digital companies’ bottom lines.
Amazon grew employees 138% between 2018 and 2022, per analysis by Insider, and experienced record profits during the pandemic. Meta grew its employees by 143% over the same period, and Alphabet by 93%.
These firms are now aggressively cutting jobs.
Amazon is axing 27,000 jobs. Meta is set to cut 21,000 staff, with CEO Mark Zuckerberg admitting in a memo he had wrongly assumed that the surge in online activity during the pandemic would mean a “permanent acceleration” for Meta’s business.
“I got this wrong, and I take responsibility for that,” Zuckerberg wrote last November.
It wasn’t ‘fake work’
Goodarzi disputed one characterization of mass layoffs by his fellow tech CEOs: That they were down to some people doing “fake work.”
“I’m not sure any companies hired a bunch of people to do fake work,” Goodarzi said, adding that this was “a real reach.”
The term “fake work” went mainstream in March after venture capitalist Keith Rabois suggested that Google and Facebook had spent years intentionally overhiring staff to bolster their own headcount and prevent engineers from going to rival firms. The cuts, he argued, were an inevitable corollary of the bloat. In May, Elon Musk claimed that Twitter employed “a lot of people doing things that didn’t seem to have a lot of value” prior to his drastic job cuts.
“There’s nothing for these people to do — they’re really — it’s all fake work,” Rabois said at the time. “Now that’s being exposed, what do these people actually do, they go to meetings.”
However, Goodarzi told Insider that mass layoffs had in fact unnerved the remaining star talent at major tech firms, particularly in AI.
Hiring, he said, had “actually become easier because of all the tech layoffs, because of the uncertainty the layoffs have caused.” He added: “It’s getting people to raise their heads who wouldn’t.”