Are the technos the canary in the economic mine? If the cascade of layoffs of the last few days at Twitter, Meta and Microsoft and within Montreal companies does not augur a recession imminent, it reflects a sudden and obvious loss of patience among investors with regard to the technology sector.
“It’s not a great time for technology companies,” says Guillaume Lajoie, spokesperson for the sector organization Startup Montréal. On a global scale, we see quite significant layoffs within large companies due to the fall in their stock market value. On the side of the smallest companies, positions are being cut to meet the new desires of investors, who are less patient and who hope for a faster return. »
Last week was particularly painful for the Montreal technology industry. Citing a rapidly deteriorating economic environment, building materials sourcing platform RenoRun laid off 43% of its approximately 500 employees. She had thanked 70 last August.
A few days later, the Swedish producer of video games Embrace announced the permanent closure of his Montreal studio Onoma. After two years of multiple acquisitions, Embracer says it wants to tighten its belt and has decided to exit the video game mobile, the specialty of Onoma, better known by its former name of Square Enix Montreal. Some of its 200 employees have been moved to other Montreal divisions of the company, but the majority have lost their jobs.
At the same time, Microsoft and Twitter were also making layoffs. This week it will apparently be Meta’s turn, report US sources. Facebook’s parent company is reportedly considering laying off “a few thousand” of its 87,000 employees worldwide.
The reasons for these job cuts vary from company to company, but the premise is the same everywhere: listed tech companies have lost more than a third of their value since the start of the year. Economic forecasts for the coming year continue to be bleak. This makes investors impatient.
Mark Zuckerberg, the CEO of Meta, predicted at the end of October that “we should end 2023 with about the same size, or we may be a little smaller organization than we are now”. The company’s founder says he wants to “focus our efforts on a small number of priority projects in 2023”.
Microsoft sees demand for its cloud computing products plateauing these days. Twitter has a new boss which just stretched US$44 billion to acquire a loss-making social network that analysts estimate closer to US$25 billion.
Uncertain impact in Quebec
All of this has echoes all the way to Quebec. Twitter does not officially have offices here, but two of its main Canadian executives based in Toronto have been fired, in addition to a good number of other teleworkers spread across the country, including in Quebec.
The impact on us of the refocusing planned by Meta on theartificial intelligencethe short videos and the metaverse is less certain. Meta’s activities in Montreal essentially revolve around the research and development of artificial intelligence technologies. Part of this R&D is also linked to the metaverse, the immersive virtual environment on which CEO Zuckerberg pledges the future of his company.
In other words, Meta employees in Montreal should not worry too much about their near future. Sources within the Montreal industry consulted by The duty they also say they have heard nothing negative about Meta’s activities in the Quebec metropolis.
What is more worrying in Montreal tech is a recent loss of investor appetite for a certain level of risk. More cautious investors hope to see their money sooner rather than later, which forces entrepreneurs to adapt their plans accordingly, explains Guillaume Lajoie, of Startup Montreal.
“We feel that capital is becoming scarcer, so start-up cut jobs and accelerate the marketing of their product or service, to meet the expectations of investors,” he says.
Technology professionals who are suddenly looking for a job shouldn’t worry too much either, adds Guillaume Lajoie. There is still a shortage of manpower in the industry to fill all the vacancies in more financially stable companies. “In fact, if talent is freed up by big business, it might even help start-up from here,” he concludes.
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A dark autumn for Montreal techno
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