Comment by SoftTalker
20 hours ago
No, this has never been the case. Companies are and always have been very conscious of wage and salary expenses, as it's one of the most controllable categories on the P&L.
20 hours ago
No, this has never been the case. Companies are and always have been very conscious of wage and salary expenses, as it's one of the most controllable categories on the P&L.
They are making $600k in net income per employee. 10+ years ago, I'd never seen a mass layoff at any company making that kind of money per employee.
Their net income is up more than 2x in just the last 5 years. 10 years ago, Microsoft only had $85B in revenue, now they are up to $134B in net income, and they need to let 25% of the company leave?
I'll also note that the 25% didn't include anyone VP or higher. So, the most expensive employees aren't being shown the exit, just the people doing the actual work.
If I have a team of 20, making a lot of money, but I think I can do the exact same job with 15 because of AI productivity gains, should I keep the other 5 employed for the vibes?
The total net income doesn't matter: The move is management saying they are overstaffed for the work they think they need.
Assume Microsoft is expecting just a third of people to take the offer. It's just too many people to want to move to a different division that needs more labor: It's basically entire divisions that they'd have to create from whole cloth.
> If I have a team of 20, making a lot of money, but I think I can do the exact same job with 15 because of AI productivity gains, should I keep the other 5 employed for the vibes?
yes, because, (a) you would be an amoral company otherwise and (b) the productivity and work quality of those remaining 15 will plummet if you don't and AI won't save you in the end: you'll build faster and cheaper, but the quality of your products will enter a downward spiral it will be hard or impossible to exit from.
5 replies →
Why risk a sure thing? You might have others quit or get rid of someone more important than you thought. The morale hit might affect work quality. Any number of things can go wrong and its simply not worth it when you make $600k in profit per person.
> If I have a team of 20, making a lot of money, but I think I can do the exact same job with 15 because of AI productivity gains, should I keep the other 5 employed for the vibes?
What should actually happen is everyone should be paid the same amount while doing 75% of the work they were doing before, but unfortunately there are no serious power structures like unions which could ensure that technological gains actually improve people's lives in that way.
> If I have a team of 20, making a lot of money, but I think I can do the exact same job with 15 because of AI productivity gains, should I keep the other 5 employed for the vibes?
Well no, you should keep the other five to increase your output even more and make even more money.
> now they are up to $134B in net income, and they need to let 25% of the company leave?
Tomorrow they’ll announce that they’re going to spend $134b on new data centers.
Contrast that with NVIDIA's princely $2.5M net income per employee.
Or Jane Street
profitable divisions are making more than that per employee
while other divisions are sinking ship
there always a case for a yard cleanup and decluttering
But like if your company is making money hand over foot you didn't typically cut staff by 25%. You could just as easily do a hiring freeze and get out ahead of it. I mean if your profit metric is showing all green and growing you have to be really cold to say we need to fire 1/4 people now why? (to maximize shareholders short term value of course)
> I mean if your profit metric is showing all green and growing you have to be really cold to say we need to fire 1/4 people now why? (to maximize shareholders short term value of course)
Yes, it's cold, but in the grand scheme of things, it's good for the society if companies are efficient and the economy is efficient. An efficient economy means that we can produce and consume more per hour worked.
Such behavior by companies may not be in my self-interest but that's another matter.
They aren't cutting staff because they made a ton of money. They are cutting staff because they see trouble on the horizon and are positioning themselves for that. Layoffs are rarely lagging indicators. They are more often predictors of trouble coming. This bubble will explode, MSFT wants to survive it. Thats all there is to it.
This may be so but what others in this thread are trying to point out is that this is a relative novelty. Decades ago, layoffs were something that hapened at struggling companies trying to stave off bankruptcy (or already in it). It is a major cultural change to treat employees so casually as fat to be trimmed.
And one of, if not the most, expensive costs