The tech industry has not been very stable when it comes to employment. Several companies have already laid off many of their employees, and it appears that PayPal is about to join the club. The company announced that it will be laying off 2,000 of its employees.
Yet Another Workforce Reduction
The number of employees being laid off makes up 7% of PayPal's total staff. The reduction will happen gradually over the next few weeks, with some parts of the company losing staff and being affected more than others, according to Engadget.
PayPal president and CEO Dan Schulman stated that the company is treating the departing workers with utmost respect and empathy. They will also provide generous packages, as well as consultations that will help them transition to a new job.
Schulman mentioned that they have been strengthening and reshaping the company to address the difficult macroeconomic environment the industry is in. The announcement also said that the company must continue to change as the competitive landscape evolves.
PayPal conveyed that addressing the said changes requires the company to make hard decisions, referring to the layoffs. The job cuts will be affecting full-time PayPal employees from all around the world.
Leaders in units and teams will receive updates from management as they lay off workers, and they mentioned that PayPal will communicate openly and regularly. Schulman expressed his personal appreciation for the contributions made by the departing employees.
Two is a Coincidence, Three is a Pattern
The most obvious explanation for the sudden layoffs in the tech industry is so the company can save money, given that the economy has not been kind to businesses lately. However, experts say that's not the case at all.
If you look through the announcements of several big tech companies, you'll see that a lot of them had laid off thousands of employees. These companies include Netflix, Spotify, Google, Amazon, Twitter, and Microsoft.
In 2022, there has been an estimated 120,000 job cuts in tech companies, according to Stanford. It was explained that the layoffs had nothing to do with the companies' financials, but copycat behavior, according to Stanford Graduate School of Business Professor Jeffrey Pfeffer.
Pfeffer noted that workforce reductions are happening across different companies in the tech industry as a result of "social contagion." He said that the behavior spreads through a network and companies mindlessly copy others as they fire staff.
What's worse is that it actually doesn't improve company performance. Take it from Twitter firing most of its staff, indirectly leading to it losing its biggest advertisers. Not only do layoffs cost the company for severance packages, but layoffs also increase unemployment insurance rates.
Obviously, the performance of the company may also suffer as the remaining employees will try to shoulder the workload that's not meant for them to do. It will also affect workplace morale, as employees will start to worry if they won't have a job in the following days or weeks.
