Tag: Redundancies

Adidas, is one of the largest employers in Ho Chi Minh City, with 50,500 workers

Reports by the Straits Times have stated that Taiwan’s Pou Chen Corp, the world’s largest manufacturer of branded sports footwear, plans to cut around 6,000 jobs at its Ho Chi Minh City factory in Vietnam in several phases this year due to weak demand, citing two local officials familiar with the company’s plans. The firm’s PouYuen Vietnam factory will cut 3,000 jobs this month and will not extend the labour contracts for 3,000 other workers later this year, the officials said, who declined to be identified because they were not authorised to speak to media.

The PouYuen Vietnam factory, which supplies goods to global companies such as Nike and Adidas, is one of the largest employers in Ho Chi Minh City, with 50,500 workers. “The company will prudently respond to the dynamic changes in the business environment,” Pou Chen said in a filing to the Taiwan Stock Exchange.

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Construction recruitment firm Skillit announced a $5.1 million seed round led by Building Ventures

It’s been a big month in Big Tech with Microsoft Corp. announcing its multibillion-dollar investment in OpenAI, the startup behind ChatGPT. Skillit also reported a $5.1 million seed funding round, Spotify announced layoffs, and employer-of-record platform Deel reported revenue…

Microsoft

Microsoft announced the third phase of a long-term partnership with OpenAI, the San Francisco-based artificial intelligence research firm, through a multiyear, multibillion-dollar investment to accelerate AI breakthroughs. OpenAI is the startup behind ChatGPT, an AI tool that enables users to ask questions everyday language and delivers responses that appear as if humans wrote them. Some see ChatGPT has having an impact on the workforce solutions ecosystem.

Satya Nadella, Chairman and CEO of Microsoft said: “We formed our partnership with OpenAI around a shared ambition to responsibly advance cutting-edge AI research and democratize AI as a new technology platform. In this next phase of our partnership, developers and organizations across industries will have access to the best AI infrastructure, models, and toolchain with Azure to build and run their applications.”

The agreement follows Microsoft’s previous investments in 2019 and 2021 and extends its ongoing collaboration across AI supercomputing and research. It also enables commercializing of the resulting advanced AI technologies.

Skillit

Skillit, a recruiting platform for skilled, full-time construction labor based in New York, announced a $5.1 million seed round led by Building Ventures with participation from MetaProp, Holt Ventures, Great North Ventures, 1Sharpe Ventures and Takeoff Capital.

Fraser Patterson, CEO and founder of Skillit commented: “Deskless workers make up 80% of the global workforce. In construction, they are the foundation of the built world and make the $1.6 trillion in annual construction spending happen. Yet we know almost nothing about them because there have been very few purpose-built solutions that meet the needs of skilled workers and hiring managers.”

Skillit provides contractors with vetted candidate profiles, custom matching, automated workflows and data-driven compensation and labor market insights.

Spotify

According to CNBC, Spotify announced that it is cutting 6% of its global workforce as the music streaming company contends with a gloomy economic environment that has seen consumers and advertisers limit their spending. Spotify has a workforce of around 9,800 people, meaning the layoff impacted about 600 employees.

Deel

Employer-of-record provider Deel has announced in a blog post that it had annual recurring revenue of $295 million in 2022, became EBITDA-positive and hit a valuation of $12 billion.

Deel also announced it was launching a global HR platform to enable companies to manage their entire workforce, including directly hired employees, international workers and contractors. In addition, it announced a set of HR Slack plugins and began offering an in-house payroll engine.

Earlier this month, Deel announced it acquired Capbase, a fintech firm based in San Francisco.

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The decision comes after Amazon’s recent announcement of cutting 18,000 jobs globally

Amazon has announced its plans to close three warehouses in the UK and open two new major fulfilment centres. This decision may impact 1,200 jobs, but the company says all employees will be offered roles at other existing Amazon locations. The proposed closures include warehouses in Hemel Hempstead, Doncaster and Gourock, in the west of Scotland. The new sites, which are planned to open in Peddimore in the West Midlands and Stockton-on-Tees in the North East, are expected to create 2,500 jobs over the next three years.

A spokesperson for Amazon stated that the company is always evaluating its network to ensure it meets the needs of the business and improves the experience for its employees and customers. The closure of these sites, as well as the opening of new ones, is a part of this ongoing process. They also highlighted that employees affected by the closure will be offered the opportunity to transfer to other facilities.

The union representing some of the workers at the Hemel Hempstead site expressed disappointment with the decision, and is sceptical about the possibility of finding alternative work for all affected employees. The company has acknowledged that the Gourock location has less scope for alternative work within Amazon and says they will offer retraining and reskilling opportunities to affected employees.

Steve Garelick, GMB union officer for Hemel Hempstead, commented: “Disappointed for the workers and disappointed for the town and a deep concern this is the thin end of the wedge for the local area.

“Some workers may be offered alternative roles but decamping to Luton, Dunstable or Milton Keynes isn’t as practical as you might think.”

This decision comes after Amazon’s recent announcement of cutting 18,000 jobs globally and joins other tech giants in mass redundancies. Amazon has over 1.5 million employees worldwide, with 300,000 in corporate roles that are likely to be affected by the worldwide cuts.

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Amazon joins big tech companies in staff cuts

EmployBridge, the largest industrial staffing firm based on US revenue, is laying off 171 employees across the US, according to a Worker Adjustment and Retraining Notification, or WARN notice, filed with the Georgia Department of Labor. Amazon is also reportedly laying off personnel, while Twitter is adding to its previously reported staff cuts.

Citing according to a source familiar with the EmployBridge layoffs, the Atlanta Business Chronicle reported that the affected employees are a mix of full-time and part-time workers who have back-office support roles such as in information technology support, accounting or human resources.

EmployBridge this month announced it completed its acquisition of Bluecrew, a Chicago-based online provider of industrial workers on a W-2 basis. Atlanta-based EmployBridge places more than 450,000 temporary associates annually via 446 offices in 48 states. It was acquired by Apollo Global Management Inc. in 2021.

Amazon this week also began cutting jobs across the company. Managers have begun informing employees that they have two months to find another role inside the company or accept severance, according to media reports.

TechCrunch reported that the company allegedly plans to lay off 10,000 – comprising roughly 3% of its corporate workforce. The figure would mark the largest “workforce reduction” ever undertaken by the e-commerce and cloud computing giant in its nearly 30-year history.

And Twitter has laid off 4,400 of its 5,500 contractors, CNBC reported. The move follows the layoffs of approximately half of its internal staff. According to a report from Quartz, counting Twitter and Amazon, major tech companies will have laid off 33,000 workers over the last month.

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Microsoft, Salesforce, Meta and Twitter make mass staff cuts

Big names in Big Tech are letting go of staff at what is said to be the most dramatic cull in tech sector history. Meta has laid off more than 11,000 employees thereby reducing its headcount by around 13 percent, while Microsoft announced at the end of October that it’s laying off around 1,000, with numbers still to be confirmed. Elon Musk led the charge, however, by laying off around half of its workforce when he took control of the social media platform on October 27. This, in a bid to run a financially healthier business by taking it private and enhancing his unilateral power as CEO.

Salesforce has joined the avalanche with an announcement of 2,500 redundancies in the US, with the jury still out on whether or not the mass layoffs will reach UK shores.

Meta, the social media giant, is battling falling revenues and rising competition despite reporting profits in excess of £23 billion. Chief Executive Mark Zuckerberg emailed employees on Wednesday morning informing them of the redundancies.

He said: “I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.” Zuckerberg said revenue growth experienced during the pandemic had not been sustained, ad performance was down, and ecommerce had declined, all in an environment of economic downturn.

He added: “[These factors] caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.” Despite drops in share prices and apprehension around Zuckerburg’s Metaverse development, he has said that investment in Real Labs will continue.

Why? the industry is asking. Since the pandemic, the tech industry has seen an explosion of use of and investment in tech, probably since Facebook’s arrival 18 years ago. The result of rising inflation and reduced revenue seem to be the main reasons for the slew of mass redundancies, even in the face of reporting massive revenue over the last year.

Ken Brotherston, TALiNT Partners CEO said: “First of all, it’s only the most dramatic cull in tech history if you’re under 40. The dot com reverse was quicker and deeper in percentage terms but, of course, that isn’t any comfort if you are one of the people affected. What might offer some succour however is that we still have a pretty robust employment market with a lot of the skills previously valued by these big tech firms still in high demand from lots of other employers.”

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The redundancies equate to 13% of Meta’s headcount

Meta has laid off more than 11,000 employees thereby reducing its headcount by around 13 percent, in the most dramatic cull in its history. The social media giant is battling falling revenues and rising competition. Chief Executive Mark Zuckerberg emailed employees on Wednesday morning informing them of the redundancies.

He said: “I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted.” Zuckerberg said revenue growth experienced during the pandemic had not been sustained, ad performance was down, and ecommerce had declined, all in an environment of economic downturn.

He added: “[These factors] caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”

Michael McCartney, Employment Partner at Fladgate commented: “Meta’s announcement that it plans to make significant job cuts in response to the current macro-economic environment comes very soon after similar cuts were imposed by Elon Musk following his purchase of Twitter, demonstrating that there is a real impact on advertising revenues in the social media sphere. It would be surprising if either company adopted the approach P&O Ferries deployed recently when it sacked 800 seafarer without prior warning. This is because UK employment law requires an employer to consult with elected representatives (or Trade Unions if there are any recognised) for a minimum period of 30 days, where it envisages 20 or more redundancies and, for at least 45 days, if that number exceeds 100 redundancies. The company is also required to send a notice called an HR1 form to the UK government and if it fails to do this, its directors run the risk of criminal liabilities.

Social media firms (even more so than a travel company) are bound to be conscious of the negative publicity for any failure to comply with employment laws even if the financial penalty (which amounts to 13 weeks’ pay per employee) alone is not enough of a disincentive.”

Florence Brocklesby, Founder of Employment Law Specialists Bellevue Law also commented: “Redundancies are, sadly, a fact of life, and delivering difficult news is never easy. But how a restructuring is conducted is hugely important, not only for those leaving the business, but also for those who remain and the company’s wider reputation. Good processes combined with humanity are key to navigating a challenging time safely and with dignity.

“Twitter’s handling of its current restructuring has shone a light on how redundancies in the tech sector should – and should not – be handled. Just a few days ago Twitter announced plans to let go of 50% of its staff, with swathes of employees finding themselves suddenly locked out of company systems. Meta needs to avoid making those same mistakes today.”

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Tech companies were responsible for the highest number of redundancies in September

According to GlobalData, around 90 companies announced layoffs in September 2022, which is a considerable increase from the previous month. The data and analytics company’s News Database notes that this reduction in labor is a result of negatively impacted business sentiment amid cost cutting, high operating expenses, and the current economic crisis.

According to GlobalData’s Job Analytics Database, the number of jobs available for application (‘active jobs’) continued to fall in September 2022, as the pace of job closures and removals from career pages (the ‘jobs closure rate’) was higher than the rate of new job postings. The research also indicates that many companies are planning to restructure or realign their businesses, which could result in employees being laid off. In September 2022, companies that laid off employees as part of a restructuring strategy included Netflix, Meta, Wipro, HCL, Twilio, Credit Suisse, and Snap.

Furthermore, according to GlobalData’s latest report, ‘Global Hiring Activity – Trends & Signals Q3 2022’, over 300 companies announced layoffs during the quarter ending September 22.

Sherla Sriprada, Business Fundamentals Analyst at GlobalData, commented: “Of particular interest is Meta, which announced both a hiring freeze and team restructuring to reduce expenses and realign objectives. The company’s job postings fell by 23% in September 2022 over January 2022.”

Rachel Foster Jones, Thematic Analyst at GlobalData, said: “Meta’s headcount shows no sign of increasing this year. The company, like much of Big Tech, is trying to cut costs as it grapples with a weak advertising environment and a tough macroeconomic climate. This is the tip of the iceberg for Meta. Meta is also facing fierce competition with Tiktok, regulatory hurdles and an incredibly costly and currently unprofitable metaverse ambition. Meta cannot afford to cut its hiring freeze short.”

GlobalData’s research indicates that technology companies were responsible for the highest number of layoffs in September. For example, tech company Twilio, as part of its restructuring strategy, laid off 11% of its workforce. The company’s job postings also fell by 72% during the same period.

The banking & payments industry was another key sector affected by layoffs.

Sriprada continues: “Credit Suisse laid off 5,000 employees as part of a restructuring plan, with the company’s job postings falling by 32% in September 2022 over January 2022. Meanwhile, the Goldman Sachs Group laid off 25 investment bankers in Asia. However, job postings rose in India (22%), Singapore (16%), and Hong Kong (8%) in September 2022 over January 2022.”

In the retail industry, Rent the Runway is planning to restructure, which will involve streamlining its organizational structure and increasing operating efficiencies. The company also witnessed a drop of 74% in job postings in September 2022. Other companies experiencing the strain include The Gap, PVH, and Wayfair.

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Nearly all major tech firms have slowed headcount growth

Microsoft Corp. has announced layoffs across multiple divisions, according to media reports, joining many other tech firms that have cut staff in the unsettled economy.

Microsoft declined to say how many jobs had been cut, but a source told Axios that the layoffs numbered under 1,000.

In a statement to Axios, the tech giant said: “Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly. We will continue to invest in our business and hire in key growth areas in the year ahead,”.

The move is yet another example of large tech companies cutting jobs after earlier moving to slow or freeze hiring as the broader economy cools, Axios reported. Nearly all the major tech firms have slowed headcount growth, with many freezing all but essential hires. A number of companies have already moved to cut jobs, including Snap and Flipboard.

Microsoft has not said how many people had been laid off, nor which departments were impacted. However, The Washington Post reported layoffs affected the wargame simulation division and the Xbox gaming division.

Microsoft had 221,000 employees as of June 30, an increase of 40,000 people or 22% from the same point the prior year, GeekWire reported. It was the largest annual increase in employment in Microsoft’s history, based on data tracked by GeekWire.

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How HR teams can manage difficult staffing decisions effectively

Fashion retailer Missguided has come under fire for the way it recently announced a number of redundancies.

Following its collapse into administration due to increased supply chain costs, inflation, and weakened consumer confidence, the Manchester-based retailer announced that 80 staff members were being made redundant.

Although redundancies are not good news for most employees, in the case of Missguided, it was how the announcement was handled that sparked controversy.

The i newspaper reported that staff were advised via two separate phone calls – one for staff whose jobs were safe and another for those who would be losing their jobs.

Ex-employees have claimed that:

  • Staff who were not working at the time as they were on holiday or maternity leave found out via colleagues and social media posts that they had been made redundant
  • Staff were only given 20 minutes’ notice ahead of the phone call
  • Staff did not know that two separate phone calls had been arranged
  • Staff were muted during the call and given no opportunity to speak
  • Employees who had lost their jobs were told not to return to the office and that their belongings would be returned to them
  • Security guards stopped sacked staff from entering the Manchester offices.

With remote and hybrid working, it is no surprise that companies use Zoom and other online mediums to announce major company decisions.

Missguided are not the only company to have taken this route. Earlier this year, P&O Ferries told hundreds of employees via a video recording that they were losing their jobs with immediate effect and were being replaced with cheaper agency staff.

Similarly, online US mortgage firm Better.com made 900 employees redundant via a Zoom call. Later, CEO Vishal Garg apologised for failing to show adequate “respect and appreciation” for the employees involved.

In 2020, workers at the ride-hailing firm Uber were told that they would lose their jobs via a three-minute video Zoom conference call.

Even though digital communications make sense in large organisations, hearing that one has lost a job via broadcast communication is less than ideal. Hearing the news from a line manager is a much better option.

Redundancy processes are stressful for employees and HR teams, so the process should always be handled sensitively and professionally. Honesty and clarity are key components of successful support.

Adele Edwin-Lamerton, Senior Associate, Employment at Kingsley Napley, said: “Due to the increase in hybrid working, meetings which previously would have only taken place in person now frequently occur remotely. Although this can feel impersonal, what is key is that the appropriate process is followed. It’s not so much the medium which is used, but the message it conveys which is important.”

“However pressed they are for time, employers should remember that they need to adopt a fair process and consult with their employees.”

Professor Jonathan Passmore, Senior Vice President at CoachHub, commented: “… as part of the C-Suite’s wider communication remit there is also a role to be played by a broadcast communication during the process of letting an employee go. This communication should explain more about the background to the decision, taking responsibility and sharing in the pain which such decisions cause for the individual, their family and the wider community, if the firm is a large local employer.”

“Technology is a facilitator of communications, but just because we can, does not mean we should. Leaders need to leverage technology while not losing sight of the humans who are receiving such messages. A broadcast message ensures everyone receives the same message, at the same time, but its strength is its weakness, as not every individual is the same. For some a redundancy may be welcome news, for others a mild disappointment, while for many it provokes both a financial and personal crisis.”

“At present, leaders have little training on digital communications and few organisations have protocols. As we move forward in 2022, business schools need to look again at what a leader in a hybrid world looks like and adjust what they teach. Meanwhile, organisations must look critically at their processes to ensure they still concentrate on the people which make up their organisation, putting into place support mechanisms such as workplace and career transition coaching, to help their employees navigate recent years’ life changes.”

Paul Holcroft, Associate Director at Croner, suggests: “Being made redundant can be an incredibly distressing time, so it is essential that employers maintain regular dialogue with affected staff.”

“Given the complexity of a redundancy procedure, employers should provide individuals with a clear explanation of their rights and a timeframe for when decisions will be made. This reduces any unnecessary stress and ill feeling among the workforce. Employees with a minimum of two years’ service are eligible for a reasonable amount of time off to look for new work or to arrange training for future employment.”

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VC-backed companies under pressure with bleak macro-economic and geo-political outlook

Swedish “buy now, pay later” company Klarna has announced its intention to lay off 10% of its global workforce in a pre-recorded video message. Klarna CEO Sebastian Siemiatkowski cited “the war in Ukraine unfold, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession” as the reasons for the layoffs.

This news comes off the back of a report which emerged last week, stating that the Swedish company’s valuation fell by 30% from the $45.6 billion valuation it received last June.

Even with the decreased valuation and layoffs, Siemiatkowski reassured employees that “Klarna continues to hold a strong position in the market” and says he remains “relentlessly optimistic about Klarna’s future.

BNLP businesses boomed at the start of the pandemic, where lockdowns meant that customers had little else to do with their time but shop.

More than two years on, however, luxuries are just not in the budget of many consumers, and clearly, retailers are feeling the pinch. With ever-increasing fuel costs, utilities rising by 50%, NHI contributions increasing, food prices rocketing, and inflation expected to reach more than 10% by year-end, consumers are tightening their belts. BNLP businesses, such as Klarna, have insights into these sentiments, with their product being used by 17 million people in the UK.

Klarna is not alone in its troubles. Grocery delivery start-up, Gorillas, has also recently announced its intentions to cut 300 jobs – around half the employees at its Berlin headquarters. Gorillas are also looking at pulling out of Italy, Spain, Denmark, and Belgium. According to a TechCrunch report, the company has a large debt to suppliers, with a burn rate of $50 million to $75 million.

More venture capital-backed companies will likely announce layoffs and hiring freezes as they prepare for tough times ahead. Layoff tracker, Layoff.fyi reported that in Q2 of 2022, over 13,000 tech start-up employees had been let go.

Other casualties of the current negative macroeconomic outlook include AI start-up BeyondMinds, which recently closed its doors, and healthtech business Kry’s reduced its team by 10%.

Siemiatkowski admitted that Klarna’s decision to reduce numbers was one of the “hardest” decisions in their history but a necessary move to stay “laser-focused on what really will make us successful going forward.”

“While crucial to stay calm in stormy weather, it’s also crucial not to turn a blind eye to reality,” he added. “What we are seeing now in the world is not temporary or short-lived, and hence we need to act.”

Ken Brotherston, TALiNT Partners CEO also made comment: “The US and European tech markets are very turbulent, inflation is high and the war in Ukraine and ongoing supply chain issues in China all create a perfect economic storm. The impact on employment/hiring is less clear as there are structural shortages in many markets but it’s clear that buyers are spending less and this results in diminished demand for retail staff.”

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