Storage company Seagate set to cut 3,000 jobs

The storage company Seagate has revealed that it’s laying off 3,000 employees as it restructures and cuts costs. The jobs being cut represent 8% of its global workforce, but the company says it needs to reduce costs to meet the needs of the current economic downturn. Those affected are expected to be let go by the company by the end of the second fiscal quarter next year, and it’s expecting pre-tax charges of up to $70 million related to employee severance and other termination benefits.

Providing a comment on the matter, Dave Mosley, Seagate’s CEO, said:

“Global economic uncertainties and broad-based customer inventory corrections worsened in the latter stages of the September quarter, and these dynamics are reflected in both near-term industry demand and Seagate's financial performance. We have taken quick and decisive actions to respond to current market conditions and enhance long-term profitability, including adjusting our production output and annual capital expenditure plans, and announcing a restructuring plan that will deliver meaningful cost savings while maintaining investments in the mass capacity solutions driving our future growth.”

Over the last couple of months, other tech firms have been cutting back on the numbers they employ. Calm cut 20% of staff, Snap announced a 20% cut, Twilio reduced staff numbers by almost 900, Meta has said it will make people redundant, and Microsoft has laid off almost 1,000 employees working in the Xbox and Azure divisions.

COVID-19 lockdowns are still affecting supply chains in China and the war in Ukraine and resulting sanctions are hitting supplies of food and natural gas. Demand for these items is outstripping supply, causing prices to rise. To prevent inflation getting out of control, central banks, such as the U.S. Federal Reserve, are hiking interest rates. Higher interest rates will cause people’s disposable income to drop, meaning there will be less demand for scarce products - this should ease inflation over time.

With less money leftover, people are cutting back on services like Netflix or phone upgrades, and this is hurting the profits of tech firms. As a result, these companies are cutting back on their more experimental ventures and focusing on their profit-making products and services – unfortunately, this means many employees will no longer be needed at their respective company.

Source: Seagate via Bloomberg