Emerging technologies such as cloud computing, software-defined networking (SDN), the Internet of Things (IoT), and 5G, are driving a lot of changes in the tech world. And these new technologies are causing many companies to rethink their business models and revamp their product portfolios in order to stay competitive.
Big tech firms are typically impacted the most and face more challenges than startups. According to John Challenger, CEO of outplacement firm Challenger, Gray & Christmas, big companies are always laying off employees because, by definition, they are slower moving than their smaller competitor startups.
Challenger added that so far layoffs in 2016 are heavier than layoffs in 2015, most likely because the industry is changing so rapidly. Layoffs are a sign that tech companies are trying to be on the forefront of these changes so they can reinvest in new areas and cut their losses before it gets out of hand, he says.
With that in mind, we looked at some of the biggest layoffs in the tech world so far in 2016. And the results are not pretty. Among the tech companies we cover closely, more than 35,000 jobs have been lost and there are still four months left in the year.
Here’s a recap of the biggest job cutters in 2016 (so far):
Intel Lays Off 12,000
In the midst of a dramatic decline in PC sales, Intel hopes to morph its company toward cloud computing and IoT . To accomplish that, the company in April started by laying off 12,000 of its employees, or 11 percent of its workforce.
This is a heavy blow considering that 60 percent of Intel’s revenues are related to PCs. Intel says the layoffs will save the company $750 million this year and $1.4 billion per year after that.
For Intel’s second quarter, which ended July 2, the company met its own forecasted $13.2 billion in revenue. However, this was the third consecutive quarter of declining revenues as the company’s PC sales continue to shrink.
Ericsson Lays Off More Than 8,000
After several quarters of poor earnings, in July Ericsson decided to oust its former President and CEO Hans Vestberg. In addition, the company laid off an undisclosed number of employees. The number of jobs cut was rumored to be between 3,000 and 4,000, according to a report from Swedish newspaper Svenska Dagbladet. This comes after cutting 8,000 employees in the first half of the year. Ericsson also said it plans to cut back on its research and development budget to compensate for a 24 percent drop in second-quarter net profits.
This news comes as wireless operators have cut their investment in 4G equipment, preparing for a market shift geared toward 5G. On the bright side, Ericsson’s cost and efficiency program unveiled on July 1 revealed that it is on track to save the company $1.05 billion by year-end 2017. The new program is intended to reduce costs and improve efficiencies as well as eliminate duplicate product development.
Ericsson is hoping that things will turn around when wireless operators start making investments in 5G. The company is involved in several U.S. operator 5G trials, including AT&T, Verizon, and Sprint.
Cisco Lays Off 5,500
Cisco announced plans to lay off 5,500 employees, or a 7 percent reduction in its workforce, in mid-August.
The networking giant has been trying to transition from its networking hardware roots to a more software driven business. To accomplish that, the company plans to reinvest nearly all of the cost savings from its layoffs into higher-growth businesses such as security, IoT, next generation data centers, and cloud. However, the company has still managed to maintain a positive revenue stream of $48.7 billion for fiscal 2016, which is up 3 percent year over year.
Cisco’s CEO Chuck Robbins said that security is the No. 1 priority for its customers, and the company will continue to add functions to its security portfolio.
IBM Lays Off Around 5,000
After four years straight of declining revenues, IBM initiated another round of layoffs in March that impacted about 5,000 employees according to the Wall Street Journal. The cuts are likely prompted by the company’s continued struggles to keep up with the rise of cloud computing. IBM’s revenues overall fell to $20.2 billion in the second quarter compared with $20.8 billion in the year-ago quarter.
The good news is that IBM’s new strategic imperatives — including cloud initiatives, analytics, and Watson — grew 12 percent in revenues during the quarter and now make up 38 percent of total revenues. IBM’s cloud initiatives includes services such as IBM Cloud as well as sales of hardware and software for customers that build their own clouds.
IBM is trying to increase its cloud presence and has been accomplishing this via various acquisitions such as EZsource and Gravitant.
Microsoft Lays Off 4,700
Over the past year, Microsoft has laid off 4,700 of its employees as its smartphone hardware business continues to lose traction. In May, the company announced it would lay off 1,850 employees, followed by 2,850 employees in July. Many of the job cuts were located at Microsoft Mobile unit in Finland. As a result, the company will record a restructuring charge of about $980 million, $200 million of which will relate to severance payments.
Microsoft is moving its mobile efforts toward the cloud and focusing on its Azure platform. In July, the company reported Azure’s growth of 102 percent year-over-year revenue, and the cloud service has doubled its sales every quarter this fiscal year. In bringing customers to Azure, Microsoft hopes to play off of the relationships and partnerships it already has with large enterprises.
However, Microsoft’s entire cloud division still includes products that are tied to normal servers and typically include physically installing something on-premises, which is declining its overall cloud division’s revenues. For its fourth quarter, which ended June 30, Microsoft reported revenues of $20.6 billion, compared with revenues of $22.2 billion in the same quarter a year ago.