google facebook layoffs case study

Google fired 12000 employees in one stroke! Microsoft fired 10000 employees by sending just an email. In-fact Amazon is also preparing to fire a lot of employees. In which more than 18k employees will loose their jobs. In the same way, just through an email, Mark Zuckerberg fired 11k employees, 13% of their workforce. But the problem is, it is not about just American companies. If we talk about India, then many startups like Unacedamy, Byju's, Ola, OYO, Meesho, all these companies have fired 21,500 employees in total.

But the question is, why? Why these companies which are well known in the market, are firing so many employees in one stroke? Is there something happening behind all this that most people are not aware of? And most importantly, how is your life and mine going to be affected by all this? Covid-19, this world passed through a hard phase for two years. But if we talk about the current scenario according to World Economic Forum 2022, Executive Opinion Survey which is the biggest concern, that is inflation, affordability and national debt. World executives were asked what they thought, what could be the biggest threat for their country?

And most of it had the same answers, like inflation and recession. But the question is how all these things are connected to mass layoffs? So see, during Covid people lose their job, because of which they couldn't afford those things which they were able to buy till now. People's buying things and our country's GDP is a simple equation When people buy more things, GDP will increase and vice versa. Due to lockdown when people lose their job, GDP had fallen so much that our country was going through a recession! But how recession comes in an economy? So see, to understand this first of all we would have to understand the business cycle.

Business cycle which we also call trade cycle or economic cycle. Basically if you look carefully, this cycle tells about those different cycles, which every economy has to deal with. The moving flow of this cycle depends of GDP of a country. All countries experience both phases, growth and decline. The difference is that all countries don't experience it at the same time. Recession means economic decline. If you look at the chart, then this portion when any economy is at this stage, then it means that the economy is moving towards the recession.

In simple words, when the GDP growth of any country is going negative for six months, that means the economy is moving towards the recession. And the biggest indicator of this recession that is unemployment. And this thing creates snowball effect. So see when there is economic slowdown, the revenue generating activities decreases in that economy. Due to which labor requirements decreases, due to which excess labor loose their job! During Covid people weren't buying many things. Due to which business weren't getting money, which resulted in negative GDP growth.

As a result of which the requirement of excess labor started decreasing. Due to which all businesses fired their excess labor staff. When they got fired, they didn't have much money to spend. As a result of which they started spending less money in the market. And this thing creates  a cycle form. See this is a cycle. When many companies bulk fire their many employees, then because they spend less in the market, then the business from which they were purchasing goods, they make less money due to which due to which they also have to fire their employees.

And when this things creates high snowball effect, people can't even fulfill their basic needs. Because they don't have money left for that! Due to which governments all over the world were introducing various schemes during COVID. But the actual problem came after COVID. When covid ended, people started purchasing goods, due to which demand skyrocketed. Now the demand of the goods was high but supply was limited. Due to which the prices started increasing.

Now when the prices increase, they don't increase for just job doers. It increase for business people also. Due to which the expenses started increasing of businesses and they had to cut down on their expenses. So they fired people again. The prices were increasing so rapidly, that things became unaffordable for most of the people like before. Look at this chart very very carefully. See, according to official figures, average wages - both including and excluding wages.

have increased by 6% in just three months in 2022 if we compare it to 2021. But the thing is that the inflation increased by 10. 7%. So you see, even after people's income increased, still they can't afford things, because inflation increased much more than their salary. But try to understand this. This cost didn't increase just for people, rather it increased for businesses also. So instead of increasing salaries of their employees, they started firing more people instead of controlling their cost.

But wait a minute. Google, Microsoft, Facebook and all Indian startups are they firing people just because of these economic factors? Or is there something happening that most people are not aware of? So see, the actual reason behind this is, herd mentality of tech companies. Google CEO Sundar Pichai said this in a public blog while addressing his own workforce 'to match and fuel that growth, we hired for a different economic reality than the one we face today'. And the reason behind this was herd mentality. And this thing happens a lot in tech industry.

Because see, things change rapidly in tech. And if a business fails to do that then that business loose to competition instantly. So tech companies run on trend. They imitate each other. That is the reason when ChatGPT was launched recently, Google also launched its Bard AI hastily, which failed terribly. So in a lot of cases, if you ask a tech company, that why are they firing people? So in most of the cases, this will be their answers.

We are firing because other tech companies are also firing. And if we see it from an economic perspective, then there is a simple logic behind this. And this is the logic. Suppose Google fired 10k employees. And these employees used to shop from Amazon. And because they have lose their jobs, they will cut down their expenses. Due to which they won't shop from Amazon.

As a result of which, the sakes of Amazon will drop! Due which Amazon would make less money. But the fixed expenditure of Amazon is fixed. Due to which Amazon will fire some employees to cut down its expenditures. So you see when Google fired employees, its snowball effect came on Amazon also, and Amazon also fired its employees. And when it happens in market, then other companies like Facebook, Microsoft, Twitter, Stripe, Shopify, Netflix will think about cutting down their expenses. Why?

Because Google and Amazon is doing this. So they might be a reason. See a lot of such decisions are taken in business world daily, which we don't understand ideally. Why? Because we don't have the knowledge of business world. How to build a company, how to build a business, what things we should care about, what things to do and what things not to do. In-fact what are those decisions which most of the people don't like, but business owners have to take those decision to save their businesses.

All those people know these things who have made businesses from scratch. And we are not able to get this knowledge. Like Ashneer Grover worked in a bank first, and then he worked somewhere else, after which he started Grofers and after successfully building it, he made Bharatpay. And if you see, he is preparing for the next startup! But during this whole journey he made a lot of mistakes, he also did a lot of right things. And all the things he learnt in his life, he has told all those things in his book 'Doglapan'. And I also focus on saving time and money.

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So if you think it is valuable, then you can take your knowledge to the next level by downloading the app from the link given in description and comment box. And if you use my coupon code RUNJH2258, then you would get 50% discount on first month subscription, that means it can be yours just in 49 rupees. So amazing, isn't it? I've put the link in description and comment box for you! Offer is limited, choice is yours. Russia-Ukraine war. Many countries had to re-assess their trade relations because of Russia-Ukraine war.

After which western countries put a lot of sanction on Russia. And this thing cost the whole world very dearly. And I will tell you why! A lot of things and in high volume are exported to various places from Russia and Ukraine. As you can see Russia is the largest exporter of Natural gas, Pig Iron and wheat. And Ukraine is the largest exporter of sunflower seed oil. When US put ban on imports from Russian, than this is what happened.

When the Russia-Ukraine war happened, many sanctions were put on Russia, after which Russia stopped exports. As a result of which Food and Energy crises came. The prices of these things started increasing rapidly. Supply chain got disrupted and worldwide a lot of layoffs started happening. Russia had closed its Nord Stream-1 pipeline which used to give natural gas to whole Europe, until the US lifts the sanctions! So because Russia has stopped exporting natural gas, now countries have to be dependent on other countries, to get the natural gas. And the basic equation turned around.

Because the supply of natural gas has decreased a lot, and demand is very high. Due to which food and energy crisis came worldwide, and European countries started having shortage of basic commodities like grains, fertilizers and cooking oil. And crude oil prices reached their highest level as compared to 2013. Crude oil prices in March 2022 were at $123 per barrel. March 2022, European natural gas price was 7x expensive as compared to March 2021. While over the same period, South African coal prices had trippLed, and all these prices were on all time high. Due to increased price of natural gas and coal, transportation cost of fertilizers had increased a lot, as a result of which the cost of fertilizers has increased.

Fertilizers became expensive for those who were growing crops and they couldn't grow that much crops. Due to which a food crisis also came. World Bank's Broad Food Commodity Index increased by 14% in Q1 2022. And it stands 20% higher compared to 2021. Due to which a lot of trade disruptions came, and production has decreased because of high input cost. In-fact power cuts started happening everywhere. People started dying hungry!

Russia-Ukraine conflict led to the rising commodity prices, and the energy prices. Due to which whole supply chain got disrupted, and this caused massive inflation. As we have discussed earlier that when inflation comes, companies get pressurized to improve their profit margins. And the easiest way to do is cost cutting. Because the biggest fixed cost of a company is their employees, at first, company starts firing people! But wait a minute! If the companies have to fire people they why did they hire them?

We will do a situational economic analysis to understand it. Now look at this very very carefully. Let's draw a comparison between pre-covid and post-covid. See during covid, digital companies like Google, Microsoft, Twitter, Amazon, Byju's, Unacedamy the demand of their digital products started increasing. But supply was not that much. So to pull off that supply and because there was a lot of money infusing in VCs and stock market, all this money came to these companies. They had money now and had to pull up the supply.

For that, they started massive hiring, because they were betting on the growth. Now when they were investing money on growth, their operating margins had decreased a lot. After that let's come the post-covid scenario. After covid, those people who were using just digital products, they started using both, digital and physical products. Due to which the demand which increased during covid had decreased now. But the supply was very high at this time. So recession came.

Because demand is limited and supply is high. So prices of things started decreasing. Business made less money. As a result of which growth decreased, but now businesses had a big challenge to sustain. Their focus shifted to sustainability. To sustain in the business, they had to control their margins. Due to which they had only one option, of firing the excess employees which they had hired during covid!

So again, all of it boils down to supply and demand. After covid there were many such businesses, which started growing speedily. Like Airlines, Hotels, Restaurants, Event Organizing, Retail etc. But again the problem was, when there was covid, the same businesses had fired their staff to control their cost. But now when the situation is fixed and demand has increased, all these business would have to hire massively to maintain their supply. But at the speed with which they fired, they cannot hire and maintain the supply chain. And most importantly, when such a situation is created in any nation or worldwide, then how it impacts common people like us?

Amazon fired 99k employees in Q2 after doubling its size in the pandemic. Because at that time, they needed manpower to increase warehouse capabilities. Shopify - whose core technology is to build and manage online stores, they fired 1k employees which is 10% of their global workforce. The company had doubled it headcount over a two year period starting at the beginning of 2022. And as the business boomed, when number of stores started increasing on Shopify, they needed more employees. Meta i. e.

Facebook is not the exception. When covid ended, advertisers started decreasing on their platforms, due to which their revenue started dropping speedily. Given 6 consecutive months of revenue drop they fired the workforce which they had hired during covid. And this is what Mark Zuckerberg said, 'This is a period that demand is more intensity and I expect us to get more done with fewer resources. Alphabet, the parent company of Google, which grew its workforce by 30% during two years of covid, recently this is what they said to their employees. That they need to focus and improve on productivity. But there's something hidden in the middle of it all which can benefit us a lot.

And that is Brain Drain Reversal. Facebook, Google, Microsoft, Amazon, Twitter all these companies have most of the Indian workforce. And most of them shifted to western countries because they got a job from this companies. And all their offices in India and outside India, a lot of people are getting fired there. But out Indian tech companies see this as an opportunity. But why? See, all the manpower whom those foreign countries had hired, now that manpower is jobless and Indian tech companies can hired them at a good price point.

And this is where the actual game begins. Have you every thought that companies like TCS, Wipro, Infosys, HCL how are these companies growing every year? No. of employees of all these companies are increasing every year. . But why? So look at this very very carefully?

Amazon, Google, Microsoft when these companies do bulk firing the the Indian tech companies get very cheap manpower. Managerial and Technical, both! Now these companies like TCS, Wipro and Infosys hire managerial managerial manpower at cheap cost, so that they can manage their employees. But now they need technical staff also. So how would it come? Now the people whom these companies have fired, these companies bulk hire them. But why are these companies doing bulk hiring?

What's their benefit in this? Well, see this very very carefully! These companies do bulk hiring of those fired employees and technical manpower in colleges after which these companies give outsource services to western companies, and sell the services at hourly basis of the manpower whom they have hired. And the equation is very simple. Western companies give money to these companies in dollars, and they pay their employees in rupees. Let's take an example, TCS hires 10k employees. Now maybe 50% man-force is very less productive, but maybe the other 50% manforce is very productive.

So if this is the ratio, then in this scenario company doesn't care about it. Why? Because both type of employees are billed at hourly basis. Western companies are giving money to TCS for their hourly basis services. So suppose a western company is paying $20 per hour. If an employee is working for 8 hours, 20*8*10,000 employees then it means $1. 6 million a day.

This the amount which western company is paying TCS. But TCS get this work done at $5 per hour from those employees. Both types of employees are working at $5 per day. But ultimately they get their work done. So the company is earning $15 per hour per employee, even if the employee is very productive and also even if the employee is not that much productive. That's why when they hire in bulk, they need some percentage very productive, and if rest employees are not much productive it doesn't matter for them. Because they bill both types of employees through foreign countries.

That's why you will always see, when the western companies are firing their employees, on the other hand, our Indian companies are hiring at the same time. And this difference in hourly rate in Indian and foreign countries, due to which big tech companies of India like TCS, Infosys, HCL, they always fire non performers, and average performers stay in companies. That's why these companies keep increasing their number. But as a person if you want a good job and want to grow in your career, then you seriously need knowledge and skills. I keep increasing my knowledge in my free-time on KukuFM, because there more than 10k audiobooks, shows and summaries and price, just 99 rupees. And the best thing is, if you use my coupon code RUNJH2258 , then you will get 50% discount of your first month subscription. Means you will get in just 49 rupees.

You will hardly get this much knowledge at this price point. I've put the link in description and comment box for you! If you think this is valuable then you can try it out, and don't forget to use my coupon code RUNJH2258. Startups, whenever a startup comes up with its IPO, then we get very excited. And specially when that startup is well known. Like Zomato.

But those who invested money in its IPO, most of them have lost 64% of their money.

You know why?

Because something is going on in Zomato which most of the people don't know!

If you read previous article , you will know!