The drive for efficiency in the tech sector is gaining momentum as companies seek to optimize their operations. Over 300,000 workers have been laid off since the beginning of 2022, as companies realize their pandemic gains are not sustainable and economic growth slows.
Meta's CEO Mark Zuckerberg and Amazon's CEO Andy Jassy have both emphasized the need to become leaner and more streamlined. The two companies have collectively laid off 48,000 staff members in the last five months.
Tech investor Keith Rabois argues that major tech firms have been bloated and unproductive for years, and it's time to refocus on a key metric: revenue per employee.
Analysis for major tech companies between 2018 and 2022, revealing several key trends:
Tech giants expanded, but not necessarily more efficiently
Although tech companies grew in size during and after the pandemic, an increased workforce did not always translate into increased revenue. Amazon, Meta, and Twitter, which have aggressively cut jobs in recent months, saw a decline in revenue per employee despite significant hiring.
Size doesn't guarantee efficiency
The analysis shows that larger companies, like Amazon and Salesforce, generate roughly the same revenue per employee as smaller firms like Twitter. Google, Apple, Microsoft, and Salesforce were able to increase both their workforce size and revenue per employee, while others struggled.
Apple stands out from the crowd
Apple has avoided making drastic cuts like its peers, with its revenue per employee soaring from $1.9 million in 2020 to $2.4 million in 2022. In contrast, other major tech companies, such as Alphabet, Amazon, Meta, Microsoft, Salesforce, and Twitter, struggled to maintain their pandemic-driven growth.
Source: Business Insider
Technomancer is a science and tech enthusiast who enjoys writing about software and AI and other tech topics.