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Apple's Company-Wide Cost-Cutting Push To Avoid Layoffs

March 19, 2023
minute read

Apple is pushing every lever it can to reduce expenses sufficiently to avoid laying off full-time staff. Additionally, the corporation will soon allow users to video chat with a salesperson at its online shop, and the next version of iOS is on the way.

Last week, Power On reported that Apple and Chief Executive Officer Tim Cook is facing an unprecedented departure of key executives.

The Starters

Even with the economy on unstable ground, Apple Inc. is doing everything it can to prevent layoffs. It makes little difference if most of Apple's main tech competitors have already eliminated employment - Apple would have a more difficult time justifying such a move.

After all, it is still significantly more successful than any other tech business, with a profit of $30 billion in the most recent quarter alone. Apple has a $165 billion cash pile to safeguard, as well as a reputation for stability.

In addition to these issues, Apple currently has significant momentum: the stock is up roughly 20% this year. In only three months, management is slated to reveal a new mixed-reality headgear and operating system, which the business thinks will position it for the post-iPhone future.

All of this indicates that layoffs at Apple would be significantly more devastating to the company's morale and public impression than layoffs at Meta Platforms Inc., Amazon.com Inc., Microsoft Corp., and Alphabet Inc.'s Google.

Furthermore, Apple's senior executives are regarded as some of the industry's most tactical thinkers. Layoffs would either indicate a strategic error or that the world economy is in considerably worse health than previously thought. In any case, it might cause waves across several sectors and economies.

In contrast, I don't think anybody was shocked by the turmoil at Apple's competitors. During the epidemic, most of those corporations embarked on recruiting binges, which Apple generally avoided. Meta embraced the metaverse, pouring billions of dollars into a goal that has yet to bear fruit. Amazon, Microsoft, and Google, too, moved into risky areas that were outside of their core competencies.

To be honest, they had little influence over other issues like rising interest rates, currency changes, and the crisis in Ukraine, not to mention the lingering epidemic.

Apple has also suffered a setback. Sales declined 5% in the previous quarter and are anticipated to fall more this quarter. Nonetheless, it is in a better position to survive the downturn.

Yet, the firm is still striving to cut expenses and improve operational efficiency – a process that began last summer, well ahead of many other large corporations' efforts.

Here is what Apple has done so far to avoid layoffs: 

  • The company is deferring incentives for corporate teams that were previously paid twice a year. Now, those teams will receive their whole bonus in October, which corresponds to the timetable of the majority of colleagues. While Apple has already accounted for the funds, it will be able to keep them on hand for a bit longer.
  • Certain initiatives, such as additional home gadgets like a HomePod with a screen, have been delayed until at least next year. This enables Apple to reallocate its R&D investment to other critical tasks.
  • Budgets have been reduced across numerous teams, and more things now require senior vice president clearance.
  • Apple has halted hiring on certain teams and severely restricted hiring on others.
  • When some employees quit their jobs, Apple keeps certain positions available rather than filling them.
  • In certain circumstances, Apple is restricting the ability of employees — both corporate and retail — to transfer to other departments or locations, a procedure that usually comes with a fee.
  • Apple lay off several of its contract recruiters last year (non-full-time employees). It has also secretly terminated contractors who had been assigned to engineering teams and other organizations in recent weeks.
  • Travel expenditures have been drastically slashed, and trips must now be approved by top management. Other than for business-critical reasons, certain departments' travel has been halted for the foreseeable future.
  • Management has grown more demanding than ever regarding office attendance – employees are normally expected to come in on Tuesdays, Wednesdays, and Thursdays — and some employees fear this is a sign that the corporation may fire employees who do not satisfy the requirement.
  • In the retail realm, Apple is scrutinizing job attendance and hours, which has created worries. Employees may fear being fired if they do not work a particular number of hours. Some employees feel Apple is taking a harsher stance to induce employees to leave and save the firm money.

Store personnel also claim that if customers call in sick or are absent for other reasons, Apple does not replace their hours. The corporation is also discontinuing "special sick time" for time lost due to Covid, instead requiring employees to utilize regular sick time – or not be compensated.

According to some store employees, Apple does not always replace workers who leave. Yet firings, rather than huge layoffs, appear to be on the rise, they claim.

While some of these changes have offended Apple's employees, they are plainly moderate in comparison to what many other corporations have done. Apple's main competitors have together laid off almost 50,000 staff in recent months. It is roughly half of Apple's total corporate staff.

So far, Apple's initiatives have paid off: its operational expenditures during the Christmas period were significantly lower than the company's estimate. It also expects cost growth to drop significantly in the current term compared to the previous year.

Never, however, say never. As of now, it appears doubtful that Apple would lay off employees, but as we've seen over the last three years, the world is as unpredictable as it has always been. Cook has stated that layoffs at Apple would be a "last resort," but as a PR specialist, he was quick to not completely rule them out.

The Bench

Apple has added personal shoppers to its online store using one-way video chat. In its online store, the firm offered an intriguing new method to shop, allowing consumers to video chat with an Apple professional during iPhone purchases. The time corresponds with the debut of the yellow iPhone 14, and the following six months or so will most likely act as a key test ahead of the iPhone 15's autumn launch.

Customers will be able to see the Apple employee and their screens, but the company will not be able to see them. This might allow individuals who don't live near an Apple shop or are unable to visit one to receive a taste of the in-store experience.

To me, the most intriguing aspect of the statement is the mention of Apple's head of online shopping. While the corporation seldom names workers below the C-suite or senior vice president level in its news releases, the naming of online retail chief Karen Rasmussen is noteworthy. This comes only months after she took over the team as part of a series of leadership changes.

The public release of iOS 16.4 gets closer. Apple is continuing to pump out beta versions of its next iPhone and iPad software, which should be released to all users — alongside updates to macOS, watchOS, and tvOS — in the next three weeks or so.

It’s not an earth-shattering update by any means but adds the usual midcycle bells and whistles:

  • New emojis, like heart colors, animals, instruments, and flowers.
  • Faster 5G for some markets and carriers, including T-Mobile. It also brings 5G support to Turkey.
  • Push notification support from websites in Safari.
  • The return of a turn-page animation in the Apple Books app.
  • User interface tweaks in Podcasts and Music.
  • New HomeKit architecture that was removed after launching in an earlier version of iOS 16.
  • Apple Pay support for South Korea.
  • New settings for the iPhone 14 Pro’s always-on display, including the ability to tie the feature to a Focus mode.
  • Content previews in Messages for Mastodon, matching a feature available for tweets. 

The bigger story here is that iOS 16 is still missing a pair of promised features: Goldman Sachs savings accounts and Apple Pay Later within the Wallet app. But these delays aren’t entirely surprising. Apple’s fintech team has been hit by significant departures over the past year or so. It’s also suffered engineering setbacks and is facing an unclear future for some of its partnerships.

Adan Harris
Managing Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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