Zoom became one of our best allies during confinement. He allowed us to be present at work meetings, virtual classes and in many other areas. But despite the company’s optimistic stance, the popularity of video conferencing would not last forever. This Thursday, after experiencing tremendous growth during the pandemic, Zoom announced layoffs.
The US firm will cut 15% of its workforce, so it will do without about 1,300 employees. The measure, as explained in a press release, is the product of “the uncertainty of the global economy.” In this way, Zoom joins a long list of companies that have made layoffs in recent months, including Amazon, Google, HP, IBM, Meta, Microsoft or Spotify.
Another sign of ‘over-hiring’
As we said at the end of last year, the massive layoffs among the big technology companies were revealing a fundamental problem. Overcontracting, added to the complex world economic panorama, have unleashed a perfect storm with an air of personnel cuts. In the case of Zoom, the company tripled its workforce to meet the enormous demand for its video conferencing products.
And of course, it was not just about keeping the service running, but about improving the experience to attract new users and keep existing ones. From end-to-end encryption and its own 27-inch screen with three cameras and multiple microphones, to whiteboards like those in physical meetings and a partnership with Facebook. As of January 2020, Zoom had 2,500 employees. In January 2022, the number had risen to 6,800.
But video calls went into a natural decline with the return to normality. The company’s shares, according to data from Google Finance, fell 40.67% in the last year. However, following the unfortunate announcement of the layoffs, the company’s shares were up about 9.85%. This is a market movement that, oddly enough, is not unusual.
As Money.com points out, because downsizing is all about cutting costs, a cuts announcement can sometimes encourage investors. However, the opposite effect can also occur. Large layoffs often reveal business difficulties, which in this case would translate into distrust and a depreciation of the shares of the company in question.
Returning to the case of Zoom, its founder and CEO, Eric Yuan, admitted on Tuesday certain mistakes in his administration and announced that will cut your salary by 98% and reject your bonus. Other executives will also reduce their salary by 20%. “I am responsible for these mistakes and the actions we take today, and I want to show responsibility not only with words but with my own actions,” said the businessman.
Images: yiyang | Chris Montgomery
In Xataka: The wave of layoffs in big tech is a symbol of its other big problem: the lack of talent
George is Digismak’s reported cum editor with 13 years of experience in Journalism