Yahoo Announces Layoffs – To Lose 20% Of the Workforce

As the slew of layoffs continues across the tech sector, Yahoo is set to slash its workforce by 20%. The terminations come in the wake of severe economic pressure due to rising interest rates, falling demand, and high inflation.

The veteran tech company's current workforce stands at around 8,600, meaning there'll be more than 1,700 layoffs.

Yahoo has been quick to implement the layoffs, terminating more than 1,000 jobs already. The remaining 600 or so layoffs will be taking place later this year. Yahoo CEO Jim Lanzone also announced that nearly half the layoffs are in Yahoo's ad tech business, which alone accounted for 20% of the company's workforce. The unit will now see its strength slashed by 50% following its failure to deliver expected profits.

Reasons behind Yahoo's layoffs

A number of other major tech companies like Google, Amazon, Meta, Dell, and others have been cutting jobs by thousands. However, while they've cited macroeconomic conditions as the main reason behind the layoffs, Yahoo has also highlighted their focus on efficiency and profitability.

The layoffs will enable the tech company to focus and invest more in DSP, their flagship advertising business.

To quote Lanzone, the strategic changes in the company's workforce will be tremendously beneficial for the profitability of Yahoo overall". He specifically mentioned that the company's decision to cut jobs is aimed at strengthening the profiting arms of the business while the rest take a backseat. By laying off workers in poorly performing departments like the ad tech unit, Yahoo will be able to invest in more profitable parts of the business.

Changes in Yahoo's advertising unit

By now, it's clear that layoffs are largely a part of Yahoo's strategy to streamline the operations of the advertising unit. With advertisers curtailing their marketing budgets in the face of high inflation rates and a possible recession, the company is forced to make necessary changes.

Known as Yahoo advertising", the new advertising unit will focus on DSP on an omnichannel basis.

For years, Yahoo has been trying to compete directly with Google and Meta for advertising dominance. With the new changes in place, it seems they have finally decided to give up on it and refocus their goals.

According to a Yahoo spokesperson, the company will be relaunching dedicated ad sales towards Yahoo Finance, Yahoo Sports, Yahoo News, and other properties owned and operated by Yahoo.

Tech layoffs in the US

The tech layoffs in the US seem to keep coming, with four of the five Big Tech companies curtailing their workforce in large numbers. Twitter had already fired almost half its employees after the company's takeover by Elon Musk in October. Other big players like Dell, Cisco, Salesforce, and Microsoft have also joined the suite.

Over the last two months, Amazon, Google, and Meta have terminated around 20,000, 12,000, and 11,000 jobs respectively.

With the companies focused on reaching maximum efficiency by slashing their workforce, the situation indeed looks grim for IT workers. Whether the move will help these companies grow and open up new job opportunities lies yet to be seen.

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