Github To Layoff 10% Of Global Workforce In Latest Tech Cuts

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The central theses

• Github will reduce its headcount by 10%, which equates to approximately 300 full-time employees
• CEO Thomas Dohmke has stated he would like the company to focus more on its AI capabilities, including the Copilot coding assistant
• It’s part of the broader AI push from parent company Microsoft, which recently invested $10 billion in ChatGPT developer Open AI

Github has announced plans to reduce its workforce by 10% and will be working fully remotely and closing all physical offices when furlough ends. They announced a hiring freeze back in January, which will continue as part of cost-cutting measures.

Not only will they shut down their physical operations and show employees the door, but they will make efficiency-focused changes across the organization to reduce costs.

If it seems like new layoffs are being announced every day, that’s because it practically is. We’ve seen layoffs from across the tech sector, including big names like Google, Meta, and Microsoft.

Speaking of which, Github, a code-hosting platform that allows developers and engineers to work remotely on collaborative projects, was acquired by Microsoft in 2018. Until now, they’ve been careful to keep themselves independent, but these latest efficiency updates have seen companies creep in.

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The Github announcement

Therefore, Github will cut its workforce by 10% and continue its hiring freeze.

The company stated, “We have announced a number of difficult but necessary decisions and budgetary adjustments to both protect the health of our business in the short-term and give us the ability to invest in our long-term strategy.”

For those workers who have managed to keep their jobs, their working conditions are likely to deteriorate somewhat. For one, Github has announced that they are moving to Microsoft Teams for their video conferencing and are moving their laptop refresh schedule to four years from the current three years.

Could be worse, of course, but still.

CEO Thomas Dohmke emailed Github staff and said, “While our entire leadership team has carefully considered and agreed on this move, the ultimate decision rests with me as CEO. I realize this will be difficult for all of you and we will approach this time with the utmost respect for every Hubber.”

He also said he would like Github to increase its focus on AI. Their Copilot tool is an AI coding assistant that is gaining popularity in the software community. This AI push goes hand-in-hand with the broader AI vision of Microsoft, which recently invested $10 billion in ChatGPT developer OpenAI.

The investment has led them to integrate ChatGPT technology into their Bing search engine, and it’s a major disruption to the search market that has been relatively stagnant under Google’s watch for years.

With a concerted focus on shifting the entire group of companies to an AI-centric offering, Microsoft has a rare opportunity to disrupt Silicon Valley’s power structure.

Who is Github?

If you’ve never come across Github, it’s a code repository service that allows storage of code being worked on. This centralized solution means developers and engineers can make changes and customizations from anywhere in the world.

It also enables centralized storage of related project details, such as notes and supporting documentation.

It’s one of many companies that have sprung up in recent years that allow working in multiple locations at the same time. Other examples across industries include Canva, Figma, and even GSuite products like Google Docs.

The layoffs in the technical area are being extended

But of course, Github isn’t the only company laying off employees. In the current environment, it’s probably easier to list the companies that not dismiss all staff.

According to Layoffs.fyi, now the central source for layoff tracking, 159,786 jobs were cut by 1,044 companies in 2022. In 2023, 101,617 jobs were already cut in 334 companies.

These numbers represent the trend we’ve been seeing, with smaller and younger companies bearing the brunt of layoffs in 2022, while large incumbents may hold off for a few months.

But the floodgates have finally opened.

It may come as a surprise, but the market reaction to the layoff announcements has tended to be positive. Shareholders are currently concerned about cash flow as the economy looks unstable and the Fed is putting further pressure on rate hikes.

The concern is that if lower consumer demand drives earnings down (which the Fed is targeting), companies will suffer on the bottom line.

And since they cannot magically improve customer demand in the short term. There’s only one way to improve the equation. And by spending less money.

While technology companies have significant fixed costs such as servers and their physical locations, employee salaries and benefits are the largest expenses for most companies. Limiting this, even if it means severance payments, is generally well received because it means less pressure on profitability.

At least in the short term.

The final result

The turbulence in technology continues. 2022 saw huge price falls after a major bull market that ran through most of the pandemic.

Now that billions of dollars of value have been wiped from market caps and the inflation situation is starting to normalize, investors are excited to see how big tech will recover from the bear market.

With the disruption of AI and the ongoing battle for streaming market share, it’s hard to say who will come out on top.

That’s why we created the Emerging Tech Kit. Tech itself is a solid bet on future returns, but there’s no way of knowing who the winners and losers will be. This kit attempts to answer that question using AI, which analyzes masses of historical data to make predictions about tech asset movements across four different industries.

Each week, our AI predicts how various individual investments will perform across Tech ETFs, Large Cap Tech Stocks, Growth Tech Stocks, and Crypto via Public Trusts. The kit is then automatically rebalanced according to these predictions.

It’s like having your own personal hedge fund right in your pocket.

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