PLEASANTON, Calif. - Two more Bay Area software companies announced job cuts Wednesday, joining a long string of tech businesses that are laying off workers in reaction to shifts in the economy.
Splunk's cuts are estimated to impact about 325 employees.
"Splunk regularly assesses how our resources align to the evolving needs of our business. We’ve made the difficult decision to reduce our team by approximately 4%, mostly in North America," said a company spokeswoman in a statement,
"The need for the staffing is not as robust as originally thought by these companies, so they're cutting down some of the overhiring," said Enrique Lopezlira, a labor economist and director of the Low-Wage Work Program at the UC Berkeley Labor Center.
Lopezlira says the increase in interest rates also has an impact.
"The cost of borrowing has gone up quite a bit, a lot of those projects are not viable any more because the costs of capital for these firms are too high. And that makes those projects not as profitable as originally thought," said Lopezlira
Workday announced it is cutting 3% of its workforce. The company sent a letter to employees saying cuts would be to the Product & Technology organization.
"These moves are not the result of over-hiring and in fact, we plan to increase the size of our global workforce in FY24," the Workday letter stated.
Employees leaving Workday's offices Wednesday evening did not want to speak on camera, but one said that people were saddened to hear about the cutbacks and it was hard to know who had been impacted because many workers are still transitioning from a work-at-home
As tech companies continue to downsize, Mark Zuckerberg, CEO of META, which saw better than expected fourth quarter profits, said this would be the Year of Efficiency.
Lopezlira disagrees, though with the notion that layoffs are the only way to improve efficiency.
"I understand the lingo of efficiencies. I'm not sure that means you have to lay off workers in order to be more efficient," said Lopezlira, "When there's trouble on the horizon, the first place they go to cut costs is layoff workers, instead of looking at maybe compensation of executives and trying to reduce costs that way."
The impact is not just on tech employees such as software engineers. Workers in other sectors that support the tech industry could also face reduced demand and layoffs.
"People who serve in the cafeteria of these companies that provide lunches to the employees, or it could be janitors, or it could be the bus drivers who take people from one area of the Bay to the other," said Lopezlira, "Those are the workers who were already struggling during the pandemic because of low-wage work."
One silver lining is that overall, the tech industry has some 6.5 million workers and hiring remains strong.
"There's still a very robust labor market in the country and there are a lot of job openings available still," said Lopezlira.
What might be harder than finding a job, Lopezlira says, is finding a job with all the high salaries and extra benefits and perks that came with many Silicon Valley and Bay Area tech jobs.
"Healthcare, banking might not have the same kind of benefits that you had before," said Lopezlira.