WITCH vs FAANG Saga to Continue
1,50,000 is a huge number; for perspective, it’s one and half as much as the population of Seychelles, an East African country. As per the data from Layoffs.fyi, tech companies laid off more than 1,50,000 employees globally in 2022. In India, the situation was not too great either. By the first week of December, Indian startups had laid off close to 18,000 employees—most of whom worked for edtech, e-commerce and other product-based companies. However, when it comes to the largest tech companies of India and the USA, i.e., WITCH (Wipro, Infosys, TCS, Cognizant, HCL tech) and FAANG ( Facebook, Amazon, Apple, Netflix, Google), respectively, it is quite intriguing to consider how these companies tackled the year. Let’s take a look at how these companies performed in 2022 and what we can expect from them in 2023! Lay-offs When it comes to layoffs, FAANG companies are likely to place first. In 2022, Amazon and Meta made headlines for firing 10,000 and 11,000 employees, respectively, whereas Netflix laid off close to 500 of its employees. Conversely, Google and Apple exercised caution in not firing most of their employees, instead choosing to slow down their hiring processes. So much so that Apple has reportedly fired more than 100 recruiters from its pool of employees. However, for Google, the storm is yet to come. According to an audio recording obtained by The New York Times, a Google HR representative told an employee at a recent meeting that the company is considering revisiting the possibility of broader layoffs in the new year—a decision that would ultimately be taken by company CEO Sundar Pichai. In the case of WITCH companies, we have witnessed rather less firing in comparison. Cases such as Wipro firing 300 of its employees over issues of moonlighting are relatively uncommon in WITCH companies, primarily owing to their service-based nature rather than product-based like their FAANG counterparts. Profits? When it comes to FAANG companies, the tech giants have not recorded much profits in FY2022. For instance, Google’s revenue recently reported a net profit of $13.9 billion in the third quarter, a 27% decrease from a year earlier, while its revenue climbed by 6% to $69.1 billion. While in its third quarter 2022 earnings report, Amazon revealed that its net income dipped to 10% to $2.9 billion from $3.2 billion during Q3 2021. Meta, which had witnessed a decline in revenue for the first time since its inception in the first quarter of 2022, said that it’d brought in $27.7 billion during the third quarter of 2022—over 4% less than the $29.01 billion the company brought in during the same period in 2021. Notably, Apple is the only tech company among the FAANG five that has seen good results in 2022, the company posted a September quarter record revenue of $90.1 billion, which is up 8% year over year; its annual revenue was $394.3 billion, which was also up 8% year over year. Netflix, the company that is on a rollercoaster ride in the context of the number of subscribers, has seen a ray of hope in the fall of 2022 with an incline in revenue to 5.9% year on year to $7.9 billion from $7.4 billion in the previous year during the same period. On the other hand, WITCH companies have presented a somewhat different financial graph for FY2022. While Wipro’s Q2 earnings showed year-over-year (YoY) revenue growth of 13%, its profits fell to 9.3%. Infosys and Cognizant have displayed some very encouraging outcomes so far. On the strength of a 5.6% increase in revenue in constant currency from the same period last year to $4.9 billion, Cognizant announced a 15.6% increase in net profit for the September quarter to $629 million from $544 million. Infosys also performed very well in Q2 results with a consolidated net profit of INR 6,021 crore, up 11.1% from INR 5,421 crore reported in the same quarter of the previous year. TCS was also not far behind and witnessed a rise in profit by 8.3% in the Q2 results, while its revenue grew by 18% to INR 55,309 crore in the quarter from INR 46,867 crore a year ago. HCL Tech noted an increase in consolidated revenue to $24,686 crore in the quarter under review from $20,655 crore in Q2FY22—an increase of 5.2% QoQ and 19.5% YoY. Expectations When we see above, we can pretty much estimate that the tech companies, which were majorly product-based, recorded a decline in their profits while the service-based tech companies majorly reflected a rise in their profits/revenue. In the year 2023, when companies like Google and Meta are planning to cut costs and their workforce, Indian IT companies remain optimistic about the future and their plan to hire more. As per Kris Gopalkrishnan, co-founder of Infosys, Indian IT is expected to hire around 2,00,000 employees in the near future and the fluctuations in global economy will not impact the Indian industry for long, he says on a positive note.
Fluctuations in global economy will not impact the Indian industry for long, Kris Gopalkrishnan says.
When it comes to layoffs, FAANG companies are likely to place first. In the case of WITCH companies, we have witnessed rather less firing in comparison.
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Tech-savvy storyteller with a knack for uncovering AI's hidden gems and dodging its potential pitfalls. 'Navigating the world of tech', one story at a time.
You can reach me at: lokesh.choudhary@analyticsindiamag.com.