Zoom is the latest tech firm to announce layoffs, and its CEO will take a 98% pay cut
Zoom, which became a hallmark of the COVID-19 pandemic, is the latest tech company now turning to layoffs as it looks to navigate life after it.
The company is laying off some 1,300 employees, or about 15% of its workforce, CEO Eric Yuan announced Tuesday in a note to staff. He did not specify the breakdown of U.S. and non-U.S. employees.
"As the world transitions to life post-pandemic, we are seeing that people and businesses continue to rely on Zoom," he wrote. "But the uncertainty of the global economy, and its effect on our customers, means we need to take a hard — yet important — look inward to reset ourselves so we can weather the economic environment, deliver for our customers and achieve Zoom's long-term vision."
Yuan explained that Zoom — which he founded in 2011 — had scaled up rapidly to manage the demand of the pandemic, tripling in size within 24 months. But he also acknowledged it didn't spend enough time assessing whether that growth was sustainable or "toward the highest priorities."
Yuan took responsibility for those mistakes and said he would "show accountability" by reducing his salary for the coming fiscal year by 98%, as well as forgoing his 2023 corporate bonus. Members of Zoom's executive leadership team will reduce their base salaries by 20% for the year and forfeit their corporate bonuses too, he added.
His base salary last year was $301,731, according to Bloomberg.
Yuan offered support to departing "Zoomies" — including up to 16 weeks' salary and health care coverage — and pledged that the layoffs would not be made in vain.
"Each organization across Zoom will be impacted by these changes," he said. "We did not take a single departure lightly — our leadership carefully examined and made decisions based on critical priorities for long-term growth, and also looked for functions that have become overly complex or duplicative."
It's not the only sign of changing times, coming right on the heels of the White House's announcement that it will end the 2020 COVID emergency declarations in May (though the virus and long COVID will not disappear with them).
It's one of many tech companies that experienced rapid growth during the digital-heavy days of the pandemic only to announce aggressive layoffs this year, citing high (although easing) inflation and fears of a possible recession .
Why so many tech layoffs are happening right now
Tech jobs tracker layoffs.fyi says more than 300 companies have laid off more than 97,500 employees so far this year.
January is historically a busy month for job cuts across industries. But the tech layoffs are drawing attention because they're happening in an industry where explosive growth has been the norm for many years — and seemingly hitting all at once.
Arun Sundararajan, a professor of entrepreneurship at New York University, told Morning Edition that while some of those layoffs are a reaction to overhiring during the pandemic, others reflect the evolution of a company's business model in this era of automation.
"It makes it more palatable if they do this kind of workforce optimization at a time where layoffs are in the air, which is why some people sometimes conclude that layoffs are contagious," he explained. "They're not actually contagious. It just lowers the barriers and legitimizes the activity in the eyes of the executives if everybody else is doing it."
Sundararajan noted that these layoffs don't just impact people who work in computer science or engineering, since tech companies also employ people in jobs ranging from customer service to financial analysis. And, he said, they don't only impact the people who lost their jobs.
"There has been a tremendous feeling of security over the last five or six years," he explains. "And so what has happened is that people have gone from feeling secure to having to deal with a high level of uncertainty potentially for the first time in their career."
Early studies suggest that laid-off tech workers get rehired elsewhere relatively quickly. Daniel Keum, a management professor at Columbia Business School, told Morning Edition that while losing a job should not be taken lightly, these are highly trained and highly sought-after talents who are generally able to find a new job within three months.
Still, Sundararajan pointed out that Americans increasingly find community from their workplace and a lost job can mean more than just lost income. He cautioned that as more tech companies lay off workers, their ability to turn around and hire people quickly may get constrained.
He thinks we're entering "unprecedented territory" and that 2023 will likely be a tough year for graduates. That said, he predicts a return to "some pre-2017 normal" by next year and has advice for students in the interim:
"Fundamentally, you have gotten a degree that has prepared you for life. Your first job is not the most important thing. So, you know, if you can afford it, take a year off. Do something that you wanted to do before college and reenter the labor market in 2024."
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