The layoffs have hit the tech industry hard, but there is one exception – Apple. The world’s largest company has so far avoided the massive job cuts that have affected firms such as Microsoft, Google, Meta and Amazon.
It’s hard for big companies to stave off major cuts in the current volatile economic environment, and Apple isn’t immune to the business challenges that have plagued other tech giants. The company is expected to report its first quarterly sales decline in three years next month. Apple has also slowed hiring in some areas, reports The Wall Street Journal.
But for now, the iPhone maker is in a better position than many of its rivals, in part because it added workers much more slowly than other companies during the pandemic. Apple is also operating on an austerity basis, with limited employee benefits and a business focused on hardware products and sales that have so far largely avoided the economic downturn, investors said.
From fiscal year-end September 2019 to September 2022, Apple’s workforce grew by about 20% to approximately 164,000 full-time employees. Meanwhile, over roughly the same period, Amazon’s workforce has doubled, Microsoft’s has grown by 53%, Google’s parent company Alphabet has grown by 57%, and Facebook owner Meta has grown by 94%.
Apple has about 65,000 retail employees in more than 500 stores, which is about 40% of the company’s total workforce.
On Friday, Alphabet became the latest technology company to announce mass layoffs, with plans to eliminate about 12,000 jobs, the largest cut in the company’s history.
The cuts at Alphabet follow a wave of big layoffs at Amazon, Microsoft and Meta. According to Layoffs.fyi, a website that tracks layoffs in the tech sector that appear in media reports and company press releases, more than 200,000 layoffs have occurred in the technology industry since the beginning of 2022.
The last big wave of layoffs at Apple took place way back in 1997, when co-founder Steve Jobs returned to the company, which was then cutting costs, laying off 4,100 employees.
So far, Apple’s core business has shown its resilience to the broader market downturn. The other four tech giants suffered amid slower growth in digital advertising, e-commerce and PC manufacturing. In the September quarter, Apple reported that sales of its most important business, the iPhone, rose 9.7% from a year earlier to $42.6 billion, beating analysts’ forecasts.
Apple could face worse results for its December quarter, which it is due to report on February 2, as the company grappled with manufacturing problems in China, where a strict “zero-covid” policy has halted much of the economic activity. Many analysts expect demand for the iPhone to remain unchanged, and as the company continues to ramp up production, it is expected to simply move to the March quarter.
However, the company’s business model is not completely immune to the broader downturn. Apple’s services revenue continued to slow, rising 5% year-over-year to $19.2 billion in the September quarter, not in line with recent quarters.
Tom Forte, senior analyst at investment bank D.A. Davidson & Co., says it expects Apple to cut staff, but it could happen quietly by laying off workers without replacing those who leave. The company may make other cuts or adjust benefits that are common in Silicon Valley. Apple doesn’t offer free lunches to employees on its corporate campus, unlike other big tech companies like Google and Meta.
Some of the tech giants cutting jobs are spending heavily on projects that are unlikely to turn into strong businesses anytime soon, according to Daniel Morgan, senior portfolio manager at Synovus Trust.
Meta is investing billions of dollars in its Reality Labs to realize new ambitions in the so-called “metaworld.” Meta CEO Mark Zuckerberg defends the company’s spending on Reality Labs, suggesting that virtual reality will become an important technology platform in the future.
After announcing the layoffs, Alphabet CEO Sundar Pichai said the company had experienced dramatic periods of growth over the past two years. “To match and fuel that growth, we hired for a different economic reality than the one we face today.” he wrote in an address to employees on Friday.
Apple is also working on risky future projects, such as an augmented reality headset due later this year and an as-yet-undetermined car project, but doing so at a more measured pace without deviating from its core business.