Big Tech hiring freeze in the US 'unlikely to affect IT services spending'

Big technology companies such as Apple, Amazon and Facebook owner Meta Platforms plan to freeze hiring amid a slowdown in the US economy, but this is not expected to hit IT spending significantly as demand for services continues to grow, industry experts have said.

The companies are bracing for one of the “worst economic downturns”, with Amazon saying it is overstaffed after reporting a second-quarter loss of $2 billion last week.

Facebook has also scaled back plans to hire engineers while Microsoft, Netflix and Tesla have been eliminating jobs in recent months, Bloomberg reported.

However, the Big Tech hiring freeze is being offset by “significant uptake of demand for IT services”, which are mostly driven by the requirements of digital transformation that accelerated during the pandemic, said DD Mishra, a senior director analyst at Gartner.

“Most of the Big Tech firms are anticipating the risk of a recession and slowdown in the US economy, and are taking some measures in the form of a hiring freeze and slowdown in hiring due to the global economic environment, geopolitical situations and other challenges,” Mr Mishra told The National.

“[But] inflation, geopolitical disruption and talent shortages are not expected to slow IT investments significantly for now. Purchasing and investing preferences will be focused on areas including analytics, cloud computing, seamless customer experiences and security.”

Geopolitical and economic uncertainty is mounting across the world after Russia’s military offensive against Ukraine, with inflation also rising due to higher commodity prices and supply chain disruptions.

In July, the US economy shrunk for a second quarter in a row, triggering one definition of a “technical recession”, as record-high inflation and aggressive interest rate increases by the Federal Reserve hit business and housing demand.

However, the US hiring market remains strong, with employers having added more jobs in June than forecast and the unemployment rate near a five-decade low, suggesting recruitment needs are, so far, eclipsing concerns about the economic outlook.

Meanwhile, the number of information technology professionals globally is expected to grow more than 12 per cent to about 62 million in 2023, from 55.3 million in 2020, data from Statista shows.

Earlier this year, Gartner projected end-user IT services spending would grow at a compound annual rate of 9.1 per cent between 2020 and 2025.

However, the research company has since lowered its forecast to an annual growth rate of 8.5 per cent between 2021 and 2026.

“The demand pipeline for IT services is expected to stabilise, and a slowdown in additional demand could also be one of the reasons for taking steps towards stabilising demand and supply,” said Mr Mishra.

He said 2023 and 2024 would be “much better”, compared with this year.

“A combination of all these factors may require some short-term and long-term measures to navigate through emerging situations … we have not seen such an impending challenge from a services perspective in the short term.”

Technology companies may have to consider pausing their hiring plans to sustain the record growth they experienced during the Covid-19 pandemic, said George Foley, a Dubai-based senior consultant at recruitment company Michael Page.

“The worst of the pandemic seems to be over and now these tech companies are in a great position for sustainable long-term growth. While this may mean temporary freezes for some during this transition period, we are more positive about the technological future than ever before,” Mr Foley said.

Kazim Hussain, a Dubai-based business manager for cloud infrastructure and telecoms at recruitment company Cooper Fitch, said that while the technology sector in the Mena region continued to grow, some companies were slowing down overall hiring plans to ensure the employment of people with niche skills in cloud computing and machine learning.

However, it is important for technology start-ups to avoid overhiring, he said.

“[I have] witnessed many start-ups overhiring talent without demonstrating any real business growth, and then cutting jobs to balance their books.”

What Big Tech companies say about their workforce:

Amazon: the world's biggest e-commerce marketplace is also the technology sector's largest employer, with about 1.52 million people on its payroll. Now, it says it is overstaffed and has about 100,000 fewer employees, compared with the first quarter. It remains to be seen if the company — which last week reported a $2b second-quarter loss — will continue its tradition of hiring more staff in preparation for the busy holiday shopping season.

Apple: the iPhone maker could slow hiring in some units, according to Bloomberg, citing sources. Still, the company is sticking to its aggressive product launch schedule. However, Apple last week reportedly hired a veteran Lamborghini executive to help lead the development of its electric car. The Cupertino-based company had about 154,000 employees as of September 2021.

Meta Platforms: the parent company of Facebook scaled back plans to hire engineers by about a third. Chief executive Mark Zuckerberg has said he was bracing for one of the worst economic downturns ever, and also said last week the company's forecasts were too optimistic. The company had about 77,800 employees at the end of March.

Microsoft: the world's biggest software company, which missed second-quarter sales forecasts, said it would also reduce hiring in certain divisions. Microsoft, which had about 181,000 employees in 2021, recently cut about 1 per cent of its workforce and said it would remove some job vacancies.

Netflix: the world's top streaming service made several highly publicised firings since reporting a loss of 200,000 subscribers in the first quarter, on top of eliminating 150 and 300 jobs in May and June, respectively. The company had 11,300 staff in 2021 and lost 970,000 more subscribers in the second quarter.

Tesla: chief executive Elon Musk said layoffs would be needed in the challenging economic climate. About 200 employees were removed when it closed a plant in San Mateo, California, in June. The company, which beat estimates in the second quarter, had 100,000 employees by the end of 2021.

Twitter: the microblogging platform froze hiring and rescinded job offers in May amid the uncertainty surrounding Mr Musk's acquisition of the company. However, Twitter, with about 7,500 employees, recently said it would scale down its office space, but without reducing jobs. The turmoil surrounding Mr Musk's bid for Twitter also dragged the company to a loss in the second quarter.

Source: Bloomberg

The President's Cake

Director: Hasan Hadi

Starring: Baneen Ahmad Nayyef, Waheed Thabet Khreibat, Sajad Mohamad Qasem

Rating: 4/5

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Damien McElroy: What happens to Brexit?

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David Haye record

Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4

Recipe: Spirulina Coconut Brothie

Ingredients
1 tbsp Spirulina powder
1 banana
1 cup unsweetened coconut milk (full fat preferable)
1 tbsp fresh turmeric or turmeric powder
½ cup fresh spinach leaves
½ cup vegan broth
2 crushed ice cubes (optional)

Method
Blend all the ingredients together on high in a high-speed blender until smooth and creamy.

Know your cyber adversaries

Cryptojacking: Compromises a device or network to mine cryptocurrencies without an organisation's knowledge.

Distributed denial-of-service: Floods systems, servers or networks with information, effectively blocking them.

Man-in-the-middle attack: Intercepts two-way communication to obtain information, spy on participants or alter the outcome.

Malware: Installs itself in a network when a user clicks on a compromised link or email attachment.

Phishing: Aims to secure personal information, such as passwords and credit card numbers.

Ransomware: Encrypts user data, denying access and demands a payment to decrypt it.

Spyware: Collects information without the user's knowledge, which is then passed on to bad actors.

Trojans: Create a backdoor into systems, which becomes a point of entry for an attack.

Viruses: Infect applications in a system and replicate themselves as they go, just like their biological counterparts.

Worms: Send copies of themselves to other users or contacts. They don't attack the system, but they overload it.

Zero-day exploit: Exploits a vulnerability in software before a fix is found.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Yemen's Bahais and the charges they often face

The Baha'i faith was made known in Yemen in the 19th century, first introduced by an Iranian man named Ali Muhammad Al Shirazi, considered the Herald of the Baha'i faith in 1844.

The Baha'i faith has had a growing number of followers in recent years despite persecution in Yemen and Iran.

Today, some 2,000 Baha'is reside in Yemen, according to Insaf.

"The 24 defendants represented by the House of Justice, which has intelligence outfits from the uS and the UK working to carry out an espionage scheme in Yemen under the guise of religion.. aimed to impant and found the Bahai sect on Yemeni soil by bringing foreign Bahais from abroad and homing them in Yemen," the charge sheet said.

Baha'Ullah, the founder of the Bahai faith, was exiled by the Ottoman Empire in 1868 from Iran to what is now Israel. Now, the Bahai faith's highest governing body, known as the Universal House of Justice, is based in the Israeli city of Haifa, which the Bahais turn towards during prayer.

The Houthis cite this as collective "evidence" of Bahai "links" to Israel - which the Houthis consider their enemy.

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Karwaan

Producer: Ronnie Screwvala

Director: Akarsh Khurana

Starring: Irrfan Khan, Dulquer Salmaan, Mithila Palkar

Rating: 4/5

MATCH INFO

Uefa Champions League quarter-final, second leg (first-leg score)

Porto (0) v Liverpool (2), Wednesday, 11pm UAE

Match is on BeIN Sports

UAE currency

War

Director: Siddharth Anand

Cast: Hrithik Roshan, Tiger Shroff, Ashutosh Rana, Vaani Kapoor

Rating: Two out of five stars

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MOUNTAINHEAD REVIEW

Starring: Ramy Youssef, Steve Carell, Jason Schwartzman

Director: Jesse Armstrong

Rating: 3.5/5

German intelligence warnings

2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250

Source: Federal Office for the Protection of the Constitution

Buy farm-fresh food

The UAE is stepping up its game when it comes to platforms for local farms to show off and sell their produce.

In Dubai, visit Emirati Farmers Souq at The Pointe every Saturday from 8am to 2pm, which has produce from Al Ammar Farm, Omar Al Katri Farm, Hikarivege Vegetables, Rashed Farms and Al Khaleej Honey Trading, among others.

In Sharjah, the Aljada residential community will launch a new outdoor farmers’ market every Friday starting this weekend. Manbat will be held from 3pm to 8pm, and will host 30 farmers, local home-grown entrepreneurs and food stalls from the teams behind Badia Farms; Emirates Hydroponics Farms; Modern Organic Farm; Revolution Real; Astraea Farms; and Al Khaleej Food.

In Abu Dhabi, order farm produce from Food Crowd, an online grocery platform that supplies fresh and organic ingredients directly from farms such as Emirates Bio Farm, TFC, Armela Farms and mother company Al Dahra.