Gene Munster, managing partner at the tech-focused investment and venture capital firm Deepwater Asset Management says major tech companies are yet to stop laying off workers. According to what the top tech analyst said, the public and tech workers should expect further layoffs.
Gene Munster has worked for many years as a tech analyst at major communication companies such as Wall Street. Tech Giants such as Meta, Google, Microsoft, and Twitter have been laying off thousands of workers. Within one year, tech layoffs have accumulated to more than 40,000 people. Irrespective of the tech skills, companies have been laying off workers because of the global economic decline, recession fears, and rising interest rates.
But Gene Munster says companies are not yet done. He mentioned that in the coming months, more tech layoffs would be announced by different tech companies. “There’s still another 15% to 20% of headcount reductions for these big tech companies in the next three to six months,” Gene Munster shared with CNBC on Monday.
Tech Giants Over-employed Workers
Gene Munster made a bold claim concerning why many tech companies are experiencing a reduction in employee headcount. According to the ace analyst, he said one of the major reasons companies are laying off workers irrespective of tech skills is over-employment.
He says, “Ultimately, it keeps coming back to, simply, these companies added too many people too fast.”
Gene Munster also pointed out the decline in the revenue that these tech companies generated. He said most of the tech companies over the last few years made much employment that was higher than their percentage of revenue. However, Apple was quite different in his analogy. Instead, he used Apple as one of the tech companies that cared enough to balance their revenue with the number of employed people.
Apple, within the last three years as of 2019, has kept its rate of employment way behind its level of revenue. The tech giant has increased their headcount by 19% since 2019, but their revenue has also increased by over 52% in the same period. “I bring that up as a case study for what I think will be a guidebook for other tech companies,” Gene Munster said.
The experienced analyst said that other tech companies are beginning to imitate Apple and reduce the number of people working for them. Meta was one of the first companies that started the employee headcount slash when they announced laying off about 11,000 people. Amazon followed suit when they announced in January that they would lay off about 18,000 people.
More Layoffs in The Horizon
Despite the massive tech layoffs witnessed in the last year, Munster still believes more has to be done to balance many companies’ revenue.
“Just to put Google’s recent cuts into perspective: their operating margin goes up by 1% because of these cuts. So these cuts, even though they catch a lot of headlines, but that really doesn’t move the needle” Munster added.
Many tech workers are already aware they no longer have job protection, as many tech companies may decide to lay off another batch of employees because of the increasing global economic crisis.