After Big Tech grew in unprecedented and unchecked fashion for a decade, building ostentatious palaces to house growing workforces while plying them luxuriant freebies to keep them from defecting to rivals, is the wild ride over?
Tech’s largest companies, as well as their smaller competitors, are looking to cut back as they face a litany of headaches: Billions of dollars in unused commercial real estate; supply-chain and cost issues; evaporating funding; a 21% drop in global M&A activity in the first half of the year to $2.2 trillion, according to new data from Refinitiv; an all-but-shut window on IPOs; wage inflation; talent retention.
“It’s going to be a lot of pain, and a lot of people will get hurt,” C3.ai Inc. AI, -13.79% CEO Tom Siebel told MarketWatch. “We had this SPAC, NFT, crypto craziness. The days of everyone making lots of money, working at home in pajamas, being paid in bitcoin, that’s over. Tech giants flush with billions in cash aren’t crying poor, but with a possible recession on the horizon, even those with the deepest pockets have a strong motivation to watch their bills. Imagine, then, the quandary for smaller companies dependent on funding with little chance of going public anytime soon, or those stuck in the middle.
The great work-from-home debate Fledgling enterprise-software companies dependent on funding to grow operations face especially tough sledding, said Appian Corp. APPN, -5.40% CEO Matt Calkins, who agreed with Gurley that Silicon Valley workers lived in a “fantasyland” of higher pay and perks for the past few years.
Apple was ready to make the move this summer but postponed in May after more than 1,000 current and former employees signed an open letter calling the plan inefficient, inflexible and a waste of time. Microsoft does not mandate employees return to the office, but considers it standard to drop in 50% of the time. Employees can request more flexibility to their schedules.
Those that do not walk that path, though, could take the departures of workers who do not want to return with a sigh of relief, as it means they can avoid another layoff and the severance that would come with it. The dynamic feels like a complete turnaround from a year ago, when many tech workers were considering walking away, especially if companies required them to return to the office.
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