As leadership at my institution meets to discuss long-term impacts of other people not spending money on us, the first items on the chopping blocks are the super-convenient, but not super-mission critical SaaS that can be replaced by slower, but still effective processes.
The first items. Really, the only items right now. We're 100% not looking at cutting the people working here. This is new and different. 2011 was the last reduction in our labor force, and we only considered human cuts at that time.
By cutting now they are building that emergency fund. They see demand dropping back to pre-COVID levels or worse. They haven't cut employees that far yet though.
Your analogy can also work here. When I have a record year I might add some extra services to my life. I see that changing and cut the services before it's a huge problem.
Some solutions to this include furlough rather that straight cuts. Those do reduce some infrastructure costs. I can’t reduce service staff and contract work at all if everyone is working 40 hours a week still. We use the same toilet paper, water, electricity, other consumables and depreciating equipment. A saw blade cuts X feet of metal. But I can trim if everyone is working 37 hours.
To me, the news here is not slowed growth (that's obvious), it's the need to cut costs. The most effective way to cut costs is to reduce staff. It seems like today's "Big Tech" companies are doing everything they can to avoid the word "layoffs".
Without analyzing any of the specific cuts, it is a brave move to cut divisions as well as people. Too often companies just say "Everyone bears their share of the 15% cuts" without changing priorities. It's rare to say, "Let's stop doing certain things" and make the cuts that way.
What costs were being saved? I am assuming hardware/cloud type costs? Or was it making people more efficient, working on the right stuff instead of the wrong stuff?
It sounds like they were working with a gun to their head, with the short lived projects run in a survival of the fittest short-lifecycle way. Kind of sounds exhausting!
I had a funny thought: The best team to be on during cutbacks is the probabilistic programming team that optimizes who to cut.
I’m proposing that cuts like this are unnecessary for companies this flush with cash. It’s an excuse to cut staff with some reason to point to for doing so.
Employees are my biggest expense by a wide margin. I could drop half my staff and increase my net overnight. I'm not going to double my customers nearly that fast so I'll be burning through payroll in the meantime... especially considering customer acquisition is going to get harder than employee acquisition over the next year.
> cutting costs at this scale is not just reducing employees, it's getting rid of employees who are working in areas you need to cut.
Sure, but if people are going to leave after cost cutting is announced, then you can often shuffle people from those areas into other areas without dealing with whole hiring rigamarole.
These articles are always written with a not so subtle level of schadenfreude by the author.
When companies cut costs they basically have a choice of reducing COGS, reducing overhead, reducing compensation per employee, or reducing the number of employees.
Most software companies have relatively low COGS so there isn't much to cut there. Reducing overhead (office space, events) is the least painful. Cutting peoples' salaries is basically impossible, so the only lever there is holding back bonuses. Depending on the company that may be a big cost saver. The last option is laying people off.
Given those are the only options cutting overhead is the nicest thing to do. Why is that a bad thing?
> If the company is taking an action that makes it less likely for people to come to the office or enjoy it, then it's pretty clear what they are doing.
Cheaper staff reduction without redundancy payments!
Except for the intangible domain knowledge loss, but that won't appear on a finance spreadsheet.
Personally I support this. If they're cutting their staff, they don't need to be spending on a program that gives away more than it brings in.
I'm assuming they rationally did the math to see if the program was a net contributor to bottom line or not. (That's the sort of rigor i've come to expect from a company like Amazon)
Certainly there's inefficiency in any human endeavor, but just cutting staff is unlikely to solve it. At least, not if you're doing it proactively to save money. Sometimes you need redundant roles just to make sure someone is paying attention to details that might get lost.
The first items. Really, the only items right now. We're 100% not looking at cutting the people working here. This is new and different. 2011 was the last reduction in our labor force, and we only considered human cuts at that time.
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