Zoom is the latest tech firm to announce layoffs, and its CEO will take a 98% pay cut

Zoom, which has become a hallmark of the COVID-19 pandemic, is the latest tech company to now turn to layoffs to manage the afterlife.

The company is laying off about 1,300 employees, or about 15% of its workforce, CEO Eric Yuan announced in a note to employees on Tuesday. He did not provide the breakdown of US and non-US employees.

“As the world transitions to post-pandemic life, we see people and businesses continue to rely on Zoom,” he wrote. “But the uncertainty of the global economy and its impact on our customers means we must take a hard – but important – look inwards to realign ourselves so that we can weather the economic environment, deliver for our customers and achieve Zoom’s long-term vision .”

Yuan explained that Zoom – which he founded in 2011 – has grown rapidly to handle the demand of the pandemic, trebling in size in 24 months. But he also acknowledged that it hadn’t spent enough time assessing whether that growth was sustainable or “heading toward top priorities.”

Yuan took responsibility for those mistakes and said he will “show responsibility” by cutting his salary by 98% for the upcoming fiscal year and forgoing his company bonus for 2023. Members of Zoom’s executive team will cut their base salaries by 20% for the year and also forego their corporate bonuses, he added.

According to Bloomberg, his base salary last year was $301,731.

Yuan offered support — including up to 16 weeks’ salary and health insurance — to outgoing “zoomies” and promised the layoffs would not be in vain.

“Every organization at Zoom will be impacted by these changes,” he said. “We didn’t take a single step lightly – our leadership carefully reviewed and made decisions based on critical priorities for long-term growth, while also looking for functionality that was overly complex or duplicated.”

It’s not the only sign of the changing times, as it follows directly on the White House’s announcement that it would end the 2020 COVID emergency declarations in May (although the virus and long COVID won’t go with them).

Zoom’s revenue skyrocketed in the early years of the pandemic, but the stock took a hit last year as people returned to offices and in-person events.

It’s one of many tech companies that enjoyed rapid growth during the digital-heavy days of the pandemic, only to announce aggressive layoffs this year, citing high (though easing) inflation and fears of a potential recession.

Why so many tech layoffs are happening right now

Zoom joins a long list of tech companies that have announced major layoffs in recent months, including Meta, Amazon, Google, Salesforce, and Microsoft. Dell and eBay last did so on Monday.

Tech jobs tracker Laoffs.fyi says more than 300 companies have laid off more than 97,500 employees so far this year.

January has historically been a busy month for job cuts across all industries. But the tech layoffs are drawing attention because they’re taking place in an industry where explosive growth has been the norm for many years — and it’s seemingly arriving all at once.

Arun Sundararajan, a professor of entrepreneurship at New York University, said morning edition that while some of these layoffs are in response to over-hiring during the pandemic, others reflect the evolution of a company’s business model in this era of automation.

“It makes it more palatable if they do that kind of workforce optimization at a time when layoffs are in the air, which is why some people sometimes come to the conclusion that layoffs are contagious,” he explained. “They’re not really contagious. It just lowers the barriers and legitimizes the activity in the eyes of leaders when everyone else is doing it.”

Sundararajan noted that these layoffs aren’t just affecting people working in computer science or engineering, as tech companies also employ people in jobs ranging from customer service to financial analysis. And, he said, they don’t just affect people who have lost their jobs.

“There’s been a tremendous sense of security over the last five or six years,” he explains. “And what has happened is that people are going from feeling safe to dealing with a high level of uncertainty for what may be a first time in their career.”

Early studies suggest that technicians who are laid off are rehired elsewhere relatively quickly. Daniel Keum, a management professor at Columbia Business School, tells morning edition that while losing a job should not be taken lightly, these are well-educated and sought-after talents who can typically find a new job within three months.

Still, Sundararajan pointed out that Americans are increasingly finding community from their workplace, and a lost job can mean more than just lost income. He warned that as more tech companies lay off employees, their ability to turn around and quickly hire employees could be limited.

He believes we’re entering “unprecedented territory” and that 2023 is likely to be a tough year for graduates. However, he predicts a return to “some pre-2017 normalcy” by next year and has advice for students in the meantime:

“Basically, you got a degree that prepared you for life. Your first job isn’t the most important thing. So if you can afford it, take a year off. Do something you wanted to do before college and be back in the workforce in 2024.”

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