John Paul M. Joaquin Tech 01.23.2023 03:Jan AM EST

Spotify to Lay Off Staff This Week To Reduce Spending

Many of Spotify's employees will soon be on the chopping block.

The company is reportedly planning layoffs in an effort to cut costs according to Bloomberg's anonymous sources.

Spotify will be joining the likes of Amazon, Microsoft, and Google to lay off employees following the COVID-induced boom they enjoyed during the onset of the COVID-19 pandemic, along and the current economic downturn, per Channel News Asia.

Spotify Layoff Details

Bloomberg's sources mentioned that Spotify is planning layoffs as soon as this week, though they didn't disclose the number of positions the company will be eliminating. They also didn't mention a specific date as to when the company will initiate the layoffs it is planning this week.

This layoff isn't the first Spotify has done in recent years. The company did lay off 38 of its staff from its Gimlet Media and Parcast podcast studios in October 2022 and its podcast editorial employees in September of the same year.

Bloomberg's sources are people familiar with the company's plans, though they asked to remain unnamed to protect their identities.

Spotify revealed it has about 9,800 employees in its third-quarter earnings report.

The company declined to comment on inquiries regarding the upcoming layoffs, per a Reuters report.

Why Are Tech companies Laying Off Employees?

The tech industry has had its time in the spotlight. The lockdowns enacted during the early years of the COVID-19 pandemic generated a significant amount of demand as people stayed home to either work or study.

To handle the sudden demand, companies like Spotify, Amazon, Microsoft, and Google hired more employees than they normally would, resulting in unprecedented growth during 2020 and 2021.

However, the easing of travel restrictions, the gradual recovery of the economy, and the ongoing recession forced them into laying off many of its employees.

These factors meant that the growth they previously enjoyed would steadily decline until it became unsustainable to support so many employees. Additionally, the rising operating costs mean that there is less money to hire more employees or keep them in the company.

As a result, many tech companies have opted to lay off many of their employees to cut costs and reach a point where their growth can be maintained long term.

Google announced it would be laying off 12,000 employees from its workforce, with those happening in the US will begin immediately while those in other countries will take longer due to local laws and practices, per CNBC.

Meanwhile, Microsoft laid off 10,000 of its employees on Jan. 18, affecting gaming studios such as 343 Industries, The Coalition, ZeniMax Media, and Bethesda Game Studios. This layoff is the company's second-largest round following the one it initiated in 2014.

Last, but not least, is Amazon, which is planning to lay off 18,000 employees from its workforce, with its human resources and retail operations being affected the most compared to other divisions.

Amazon's hourly warehouse workers are not included in the divisions affected by its layoffs.