Mumbai: Looks like Elon Musk’s takeover of Twitter turned out to be a bad omen! Ever since the business mogul took the reins of the social media company into his own hands and laid off a slew of employees, the news hasn’t been too good for most digital companies’ workforces. and information technology (IT). Not that it was better before that. The past three months have been exceptionally bleak for IT staff in India and around the world. In a conversation with Indiantelevision.com, industry experts assess the factors regarding brand image and brand trust in such a situation.
To put it into perspective, according to Layoffs.fyi Tracker, around 787 companies around the world laid off a total of 1,20,699 employees this year. The majority of them owe it to the global recession the world is going through.
Meta, which employed 87,000 people worldwide in September, laid off the largest number of employees ever by any organization – it laid off more than 11,000 employees, or about 13% of the global work force of the social media company. His Indian counterpart was also affected. The company has also decided to freeze hiring until Q1’24. The company’s poor performance in the third quarter and an increase in the company’s overall costs of one-fifth over the previous quarter prompted Meta CEO Mark Zuckerberg to take such a step.
After Musk took over as head of Twitter, he laid off about 3,700 employees (including the company’s senior management), which is about 50% of the company’s overall workforce. The social media company’s India office marketing and communications team were shown through the exit door; a total of 180 people were fired from the Indian office. Musk felt he couldn’t let the company lose $4 million a day.
Most recently, media and entertainment conglomerate Walt Disney announced a layoff as well as a freeze on its hiring process. The company’s chief executive, Bob Chapek, made the move as part of a cost-cutting measure as the company’s streaming business suffers losses.
Computer software giant Microsoft laid off about 1,000 employees across multiple divisions last month due to business prioritization and structural adjustments. According to some media, chipmaker Intel was also considering job cuts of 20% in the previous month. The organization saw a drop in sales and profits during its performance in the second quarter of this year.
Salesforce, an enterprise software company that previously thought about laying off about 2,500 people, laid off about 1,000 people. In what could be called a hypocritical program of events, edtech company Byju’s laid off around 2,500 employees in the name of cutting costs and in turn hired one of the most expensive brand endorsers in the world. , the famous footballer Lionel Messi, for his social initiative.
Unacademy, the SoftBank-backed edtech giant, has laid off about 10% of its workforce, or about 350 employees, in line with the current funding crisis facing start-ups.
Udaan, a B2B e-commerce platform that raised $120 million last month, has decided to forgo hiring around 350 employees.
Additionally, media reports suggest that Snap, the company that runs Snapchat, was planning to cut its workforce by 20% in August. This was due to the 80% drop in its share price this year.
Affect the brand image
Considering that these are not just large companies but also successful brands in their respective fields, how does this chain of mass layoffs affect the brand image of these companies?
Jagdeep Kapoor, brand guru and founder, president and CEO of Samsika Marketing Consultants, explains that every business represented by a brand has two types of customers. External customers who are consumers. Internal customers who are employees.
“Brand image is affected by both external customers (consumers) and internal customers (employees). Brands are built in the minds and hearts of customers. and minds, and therefore the image of the brand is affected. “, he quotes.
He adds: “Ultimately, businesses are presented through brands, which are served by employees and consumed by consumers. This kind of ‘earthquake’ leads to a ‘jolt’ of trust and internal and external faiths. make mode, it switches to shake mode.”
Sideways Consulting co-founder Abhijit Avasthi agrees that for some brands, the image is tarnished. “For established tech companies, the consumer brand might not be affected that much, but the employer brand will definitely take a hit. For newer ones, like those in edtech, the consumer brand will also suffer a lot because it raises questions about their ability to provide the service well,” he says.
Communications consultancy, founder and CEO of Treize Communications, Sonam Shah, believes that while it affects brand image to some extent, employees are now more accepting of the fact that they may lose their jobs. at any time.
She believes that if this is handled sensitively, the brand will have no trouble managing its public image. She continues, “Public memory is short, and there is enough and more for the public to read and talk about. Once people get new jobs and things get better, the brand can easily work to revive its brand image.
The advocacy platform, Ajit Narayan, marketing director of Socxo, believes that the layoffs will have a negative effect, as is natural. And it’s not one or two but thousands. “People will talk about it. For a while. But then, like everything else, people’s memories are short. And life goes on as usual. Depending on the company and how they handle the situation. And if they turn back, then everything will be forgotten,” he stresses.
He clarifies: “The impact of ‘be negative’ will be temporary. More like a setback. Those who come out of it the best will be those who show empathy for those who are told to leave. And then there will be those who are ego-driven, and if the turnaround does not bring results, they will take the negative image with them.
By taking such drastic measures in terms of downsizing, how easy or difficult will it be for these companies to rekindle their brand and gain trust after being so negatively splashed in the media and arguably by the word of mouth too?
Avasthi believes it will take some time. “Companies very often confuse raising awareness with trust. Big budgets can help you build awareness, but earning trust takes time and patience and you always have to deliver the goods with integrity,” reiterates he.
“Trust is another word for a brand. It takes decades to build brands and trust. It only takes a moment to let it slip. Building a brand or an organization is hard. Rebuilding it is even harder because a lot of intangibles like feelings, emotions, and sentiments also need to be reconstructed, not only from internal and external customers, but also from their families,” Kapoor points out.
On the contrary, Shah thinks, “it won’t be a very difficult road, but a lot depends on the company’s business model and whether the company should restructure its core offerings or work on escalating current offerings.” .
Narayan also thinks this is a temporary phase and most brands will come out of it in the next few quarters. “Additionally, market reality and future plans will have a major impact. There is a looming recession, and this story and others will now be swept aside if that becomes a reality,” he said.
Dismissals in particular in the digital and IT industry
There is an economic recession across the world, which has affected and continues to affect many industries. Surprisingly, most of these layoffs seem to be happening in the digital and IT industries. What could be the reason behind this?
Avasthi mentions that the reasons for layoffs vary from company to company, so they cannot be attributed to a generic reason. However, he points out, “Overall, for some of the new VC-backed startups, it’s just because they were badly run companies trying to get ahead, trying to doing too much in too little time. in pursuit of unrealistic and unsustainable growth. There is a sense of misplaced arrogance among some of the founders; it catches up with them.
“For the big, established tech giants, I think it’s another manifestation of insatiable capitalist greed. I can understand layoffs to save a sinking ship, but if you’re sitting on billions of dollars, I don’t I can’t understand why it’s not good to make a little less money for a few years and let people maintain their livelihoods until optimal solutions are found, but then it’s a philosophical debate more wide,” he says.
According to Narayan, technology is the industry that has created large-scale jobs as well as large salaries. “The industry has been driven by scale and the idea of adoption and not profitability. To achieve the scale and speed that it is envisioned, it needs people. So they hired for scaling plans,” he points out.
Furthermore, he points out, “The ‘what if’ of growth not leading to profitability had been ruled out. And that’s what plays out as access to capital dries up. And demand profitability increases. Business leaders will need to keep this in mind as they run their business. Not just fancy talk about scale, growth, and adoption. It’s the hard truth.
Shah sheds light on some facts – the wave of layoffs happens frequently in the startup and tech space. There was a phase for a few years, pre-pandemic, where IT companies and even start-ups had a series of layoffs. Pink cards were presented to employees.
She says, “Market and economic conditions are too buoyant for job stability, especially in the IT and technology sector. People who join here are aware of this. So what’s important here is how the process is run and whether all the HR policies and compensations are in place or not.”
“These things have happened in many industries. But the service sector, which depends on people, is more affected and highlighted. But these companies and brands will rebound after a while. We will have to watch to see if these companies and brands have a permanent layoff or just a time lag,” Kapoor signs.