09 Dec, 2022 Startups and big corporations revisit strategies to balance growth and profitability, finds GlobalDataPosted in Disruptor
The current business environment is getting tougher with higher interest rates, rising inflation, talent crunch, and weaker supply chains while investors are increasingly demanding profitable growth. To hedge against these shifts, startups as well as bigger corporations are revisiting their scaling strategy and redefining tolerance for risk to strike a deliberate balance between stability and dynamism, finds GlobalData, a leading data and analytics company.
Kiran Raj, Practice Head of Disruptive Tech at GlobalData, comments: “As rapidly-changing strategic uncertainties proliferate in the existent business environment, startups as well as big corporations are plagued by negative publicity, weakened engagement, lower innovation, and higher lay-offs. The tidal wave of automation and fierce global competition are driving this change in the work environment, which is not only disruptive but also painful. The key for companies will be to find the right balance between tech-driven disruption and growth to avoid making their employees jobless.”
Shagun Sachdeva, Project Manager of Disruptive Tech at GlobalData, comments: “We saw extreme optimism in the tech sector over the last few years, where companies went for aggressive upscaling, invested in new ideas and experiments, and anticipated exponential growth mainly due to COVID-19-fueled demand. But this growth potential was short-lived with geopolitics, economic downturn, and many other economic forces having substantial effects on the business fortune—both startups and big tech companies are rolling out plans of large-scale firing and hiring freeze to startups facing funding winter.”
According to GlobalData’s Job Analytics, job postings continued to decline in Q3 2022 and over 300 companies announced layoffs during the quarter ended in September . At the same time, Future of Work and environmental, social, and governance (ESG) themes had more job postings as well as closures and companies continued to focus on digital transformation.
After purging nearly two-thirds of its 7,500-person workforce in three weeks during November, Twitter is actively recruiting for roles in engineering and sales. Amazon, after mass layoffs and discontinuing its wholesale distribution unit in India during the same month, is expected to lay off another 20,000 employees in the coming months.
In July 2022, Meta showed its first-ever loss in sales from advertising revenue and reported a 4% loss in total revenue in Q3 2022. Meta continues to be on cost-cutting spree as evident from the reduction of its headcount by 11,000 employees in November 2022.
Sachdeva concludes: “We will continue to see the wave of lay-offs and companies that were in a particularly bad patch continuing to cut bench strength and freeze hiring. The sectors of the economy that are most sensitive to interest rates, such as housing, banking, insurance, and autos, and where companies ‘over-hired,’ predominantly in the technology, are more likely to pull the trigger on layoffs. All this will have a ripple effect on other industries too. While companies must take a conservative stance on costs on the expectation of slower growth, however, it needs to be strategic enough to factor in long-term demographic shifts and increased cost of recruiting and training new workers.”