Are hundreds of Irish Twitter job losses the tipping point for a deeper tech recession that could put Ireland at high risk?
Its week’s updated corporate tax receipts underscored Ireland’s dependence on big tech, with a €6bn windfall reaped by the tech giants in additional profitability.
Of the €16 billion in corporate taxes levied so far this year, about half comes from a dozen multinationals.
But the signals around the industry are getting darker from week to week.
While Twitter’s job cuts are the most talked-about downsizing drama in the industry right now, it’s not the only tech company pushing layoffs.
Stripe – which ranks as Ireland’s top tech export of all time to Silicon Valley – is laying off 14 percent, or 1,000 workers, at its company. While the payments company doesn’t break down the cuts by area, it has now started the necessary legal advice process in Ireland for redundancies.
Stripe’s move comes just months after it announced it would create several hundred additional jobs in Ireland’s capital on top of the 1,000 new jobs it had already pledged. It currently employs between 500 and 600 people.
Meanwhile, Intel employees in Kildare are waiting to hear how many may be affected by the announcement of planned job cuts.
The list of other big tech companies cutting or freezing staff is long. PayPal (2,000 employees) is laying off hundreds of people here, while DocuSign (1,000 employees) is also signaling downsizing. Coinbase has already done so, while Meta (6,000 employees) has indicated it is halting recruitment to downsize some departments.
Even local “unicorns” – companies valued at over €1 billion – have felt a chill. Three of the 6 billion unicorns — Intercom, FlipDish, and LetsGetChecked — have announced job cuts in recent months.
Is there more to come? If so, how bad could it get?
Limerick-born Patrick Collison of Stripe says we’re not in boom times anymore.
“We face persistent inflation, energy shocks, higher interest rates, reduced capital expenditure budgets and meager seed funding,” he said in his letter to employees announcing the job cuts.
“We believe 2022 will mark the beginning of a different economic climate.”
Neither he nor his younger brother John saw it clearly enough, he said.
“We have hired too many employees for the world we are in. We have been far too optimistic about the near-term growth of the internet economy in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.”
Meta’s Mark Zuckerberg put it even more blatantly. “If I had to bet, I’d say this could be one of the worst downturns in recent history,” he recently told employees.
Alongside Meta and Intel, there are now three major tentpole tech employers worth watching closely: Google, TikTok, and Apple.
These are linchpin companies that represent the healthiest and most profitable companies in their sectors: online advertising (Google), hardware (Apple), and social media (TikTok). If two of these announce significant declines soon, we will know that Ireland is in for a very difficult time, which is what the tech giants are bringing to this economic table.
So what do we know about their intentions?
With over 9,000 mostly high-paying jobs, Google is arguably Dublin’s most important employer in the private sector.
In September, the company’s CEO, Adaire Fox-Martin, made the announcement Irish Independent that no job cuts are planned and the tech giant is still hiring. A spokesman for the company said yesterday that it will remain so despite cuts elsewhere.
A TikTok spokesman also confirmed yesterday that it still intends to complete the hiring of 1,000 additional employees in Dublin, bringing the total operations here to 3,000 employees.
And apple? While the world’s most valuable company is not commenting on specific hiring plans, it has reportedly decided to freeze new hires. But there is no sign of job cuts in Cork just yet.
Understandably, senior officials here are reluctant to promote talk of a “tech wreck.”
“We have to be careful with the language we use,” Taoiseach Micheál Martin said of the conclusions to be drawn from Twitter’s job cuts, announced just days after the social network was acquired by a billionaire entrepreneur.
“I went through a situation where once in my political life we fought for Apple’s survival. Now 6,000 people work at Apple. It’s about realignment and reconsolidation.”
Mr Martin said Ireland may have a “buffer” in the various activities the biggest tech companies are involved in here.
“In some areas of technology, we’re more involved in manufacturing here than in terms of sales, which will give us some buffer,” he said.
Other commentators say there are fundamental weaknesses here related to the cost of living that could hamper potential future growth in the tech space.
“Most of the Irish-founded startups that I have supported are being built outside of Ireland,” said Paddy Cosgrave, CEO of Web Summit and an investor in several startups.
“It’s a ratio of about three to one. Sometimes I think that’s fantastic. I sometimes lament the fact that many of our most talented entrepreneurs feel compelled to leave Ireland to build global, potentially global, successful businesses.
“Up until a certain point, Dublin was one of the lowest cost of living cities in Europe. It is now the most expensive single city in the Eurozone. It’s not an easy problem to solve, but it (the cost of living) is a huge one.”
Ireland may need these domestic start-ups more in the years to come.
This week Treasury Secretary Paschal Donohoe hinted that the €6 billion windfall from multinational tech wins is unlikely to be repeated next year. “As I have warned on many occasions, while this revenue is welcome, it is imperative that the government does not make permanent fiscal commitments based on revenue that may prove temporary,” he said.
Many in Ireland’s technology sector remain optimistic about the long-term future of the economy here. Ireland, they say, remains a relatively open, highly skilled, tech-savvy base that American companies in particular still value highly as a natural location within the EU.
But if the industry goes into the kind of recession key figures like Mark Zuckerberg are talking about, it may not just be job cuts that hurt Ireland. It could be the loss of billions of euros that has helped keep the lights on in Ireland over the last two to three years.
https://www.independent.ie/business/technology/twitter-jobs-cuts-could-be-tip-of-the-iceberg-for-ireland-as-several-big-tech-firms-scale-back-42120509.html Twitter job cuts could be tip of the iceberg for Ireland as several big tech firms scale back