Tech workforces inflated during the pandemic were cut to ribbons this year. More than 250,000 lay-offs have been announced in the year to date, according to online data aggregator Layoffs.fyi. Further cutbacks came from job listing removals and decisions to not replace workers who left. In the past two months companies including Nokia, Broadcom, LinkedIn and Twilio have all announced cuts. This week music streaming services Spotify and Tidal joined the group.
Spotify’s plan to cut its headcount by 17 per cent is the music streaming company’s third reduction this year. Chief executive Daniel Ek’s vague talk of operating efficiencies is proving popular with investors. The share price is up 137 per cent in the year to date. Yet look at the size of the remaining workforce and it seems possible that more cuts are coming.
Spotify last reported 9,241 full time employees. Downsize that by 17 per cent and the total is 7,671. If there are no more cuts then forecast sales of $16.8bn next year will be equal to $2.2mn per employee. Compare that with a company such as Meta, where revenues next year will also be equal to about $2.2mn a head in the estimated post-lay-off workforce, and it looks like a suitable size.