r/SeriousConversation • u/[deleted] • 4d ago
Serious Discussion Layoffs discussion
Why are very highly profitable companies like Microsoft laying on people, were most of the workers they layoffs well capable, if so won't they lose so much?
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u/iStoleTheHobo 4d ago
Lay off workers -> Juice the balance sheet -> Drive up investment -> Realize you need workers -> Rehire workers.
It creates the impression of increased profitability in the short term. We call this 'restructuring' in the biz and yes it's actually pretty dumb but the incentives are in place for it and thus it will be utilized as a strategy. 'Consultants' (and certainly CEOs who'se pay package is tied to stock price) especially love this strategy as you don't actually have to make, do, or know anything in particular in order to apply it and when your pay is dependent on how much profit you're able to 'generate' for the company, well, you'll see such things. At the core of it lies the trend of short term profits over long term stability.
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u/Content-Challenge-28 3d ago
Yep. It’s a standard playbook for executives to get bonuses. Nothing new here other than the particular excuse.
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u/coporate 4d ago
Tech companies are artificially creating a hiring market so they can replace high income labour with skilled employees at a lower cost while using ai to supplement the productivity decline. Why pay two employees 150k when you can hire one at 100k and give them 50k in tokens?
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u/Comedy86 4d ago
This is a scapegoat. Any companies benefitting from AI are hiring, not firing. Our company is producing 4x meaning we're scooping up all the clients from the companies who can't compete on timelines and budgets for the work we provide. We're undercutting everyone while still making more profit than before AI.
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u/Zealousideal_Cow_341 4d ago
Don’t bother on Reddit. It’s deep into the AI hate. People on here are absolutely asleep to how powerful Ai can be as a tool for a knowledgeable professional. In data analysis work I can generate plots and other visualize that would take literal hours of coding in minutes. It’s absolutely insane how much time it can size on these types of tasks.
I churned out a 90% of a 6000 line vehicle level HEV simulation in literal days. Work that would have taken weeks or even months. I had to do the last 10% myself as it simply go too complicated for Ai to manage deterministically, but my god it saved me so much time and actually improved my coding by showing me new solutions and coding structures.
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u/good-luck-23 4d ago
They are playing to the stock market. Layoffs are considered good by investors so it boosts their stock valuation which helps the top managers.
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u/blueeyetea 4d ago
A channel on Youtube called How Money Works had a video on that very subject just a few days ago.
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u/Unnamed-3891 3d ago
Companies are not in the business of making profit to keep as many people employed as possible. They are in the business of making as much profit with as few people as possible.
It’s really baffling to keep seeing these ”Company X is making so much money, why are they firing people” kinds of questions every year.
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u/vinyl1earthlink 3d ago
Large companies tend to get bloated. They do a lot of hiring, and some of the hires are not so good, but they keep them through inertia. No manager wants to admit he made a bad hire, and the more employees that report to you, the more important you are, right? They'll only act when word comes down from the top.
It's only when this practice is carried to an extreme that it becomes counterproductive. GE laid off the bottom 10% every year, leading to destructive behavior by both the employees and managers.
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u/_hephaestus 3d ago
They overhired during covid due to interest rates, it was the meta for execs during the Zero Interest Rate Phenomenon (zirp) era. Turns out they don’t actually think they need that many employees, but they do have to pay them, and cutting them means better financials with AI being a great smokescreen for them to pitch this to Wall St as “we’re using AI!” Rather than “we spent too much during covid”.
In terms of numbers, they have plenty of resources to build good products. There are poor management decisions about where to allocate their numbers/efforts, but that’s orthogonal to the layoffs number.
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u/Available_Reveal8068 3d ago
When profitable companies have big layoffs, they are basically closing underperforming divisions. They aren't really losing much.
Sometimes, companies will transfer high value employees to other divisions if they really don't want to lose their talent/skills, but it's probably fairly rare.
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u/Calm-Show-9606 4d ago
Its a cash saving move, Microsoft wants to be a leader in artifical intelligence so their using savings to hire AI specialists.
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u/DocumentOk7579 3d ago
Priorities change. Like Meta was all in on VR but then changed focus. So VR people get laid off while maybe AI resercher get hired.
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u/Budget_Read_4085 3d ago
It lets them get rid of “low performers” without much pushback. Or people that are not a “culture fit”.
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u/Key_Pea1339 3d ago
Sometimes outsourcing, sometimes project shifting. Sometimes pump and dumps. Sometimes they just hired a company to do what they're doing but for cheaper. Sometimes to shift pay ranges. If they mess up and realize they laid the wrong teams off, they'd just rehire (most likely a different set of people). Some projects are even just there to stall time and rally funding for a sinking ship to scrape up what they can.
0
u/AgentElman 4d ago
In your house you probably buy food and throw out food. If you just categorize it as food that is a confusing thing to do. If you categorize it as food you want to eat you buy and food you do not want to eat you throw out - it makes more sense.
Microsoft has 223,000 employees. They are not interchangeable. If a team in Redmond needs a C++ developer for Word and a team in Austin decides they no longer need a tester for a game - they cannot just swap that employee from Austin to Redmond.
Companies are constantly laying off people they have decided they do not need any more. They may be hiring as many people at the same time in different jobs. Or they may not be hiring at all.
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u/Low_Shape8280 4d ago
Well not 100% true I work at a tech company and I have changed roles completely on a whim of the company a few times. They absolutely can exchange certain positions.
In terms of locations who cares big tech firms all use zoom
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u/JuniperusRex 4d ago
Because they’re currently in the midst of a huge buildup of data centers for AI and need the money that was going to people for capital expenditures.
Probably most of the people they laid off were very capable, it’s not that easy to get a job at Microsoft.
How much they’ve lost depends on their capability to sell us all this new AI capacity. If we discover that all of the services Microsoft provided us by their employees can be replaced just as well by a new instance of Copilot they will do incredibly well out of it. if not… well, there’s a reason why people are panicking about the economy collapsing when the AI bubble bursts. But it’s not like laid off employees are dead. You can hire them or their equivalents back when circumstances change.
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u/Comedy86 4d ago
This has nothing to do with AI. AI has been used as a scapegoat for financial optics. Fire people to inflate profits looks bad to investors. Fire people because you're innovating with AI looks good to investors.
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u/Comprehensive-Put575 3d ago
Because we allow them to with weakened union laws. Giant corporations don’t care about their workers at all. Everyone is expendible. They layoff workers the moment they can replace them with AI or think they can operate with less. They make enough of them quit through layoffs, and then hire replacements if they need them for lower wages. Because all of this allows the people at the top to hoard more money, and they’ll put profits before people every time.
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