GitHub, the Microsoft-owned coding repository, announced yesterday that it was reducing its headcount by 10% to protect the short-term health of its business while the firm will also transition to a fully remote work model.
In a memo sent by GitHub’s Chief Executive Officer, Thomas Dohmke, the company informed its employees that the cuts will be made throughout the year although the first people to go should have received an e-mail yesterday.
GitHub is also using these cuts to better position itself to invest in its business, possibly meaning that its cash flow will be strengthened as a result of a lower overhead. The company emphasized that a new era has begun with the rising popularity of artificial intelligence.
“The age of AI has started and we have been leading this change with GitHub Copilot, our most successful product launch to date. We have an enormous opportunity to build an integrated, AI-powered GitHub with urgency”, Dohmke commented in the memo.
GitHub Will Close its Offices to Save Money
The workers that are being laid off will be entitled to receive COBRA and COBRA-like severance packages depending on where they reside along with job transition services. A COBRA severance typically involves the lump sum payment of 12 months worth of health coverage.
GitHub had already imposed a hiring pause since 18 January and that freeze remains intact, the CEO of the firm reiterated in the letter. Meanwhile, the head of the software-as-a-service company said that they are seeing low utilization rates of their office space across the world, which justifies the decision of transitioning to a fully remote model.
This will help the company in further reducing its operating expenses along with other measures such as lengthening laptop refreshes from three to four years and using Microsoft Teams exclusively for video conferences.
The number of laid-off employees in the tech sector keeps growing by the day. Data from Layoffs.fyi indicate that more than 100,000 people have been fired from firms in this space already thus far in 2023.
Some of the reasons that companies have cited to justify these departures include challenging macroeconomic conditions, lower demand in a post-pandemic environment, and difficulties to raise capital.
On the macroeconomic front, companies have seen their valuations drop sharply amid the actions taken by central banks to reduce the monetary supply – i.e. rising interest rates. This has also resulted in higher borrowing costs, which forces companies to trim their overhead to reduce their financing needs and shore up their bottom line.
Meanwhile, most tech firms were forced to aggressively increase their headcount during the pandemic as the demand for their products and solutions skyrocketed at a point when both individuals and companies were relying on online tools to perform their regular activities.
Is The Rise of AI Influencing Tech Leaders to Reduce Headcount as Well?
Another reason that may not have been mentioned by CEOs to justify these layoffs is what artificial intelligence may be able to do for their businesses shortly. This technology can be seen already as a possible replacement for some jobs and companies could be preparing themselves to embrace AI-powered solutions like ChatGPT to perform certain activities.
One example of this would be customer support, as ChatGPT may be programmed to respond to most of the inquiries made by customers and to even solve some basic issues that they may encounter with the products and services offered by the business.
GitHub is a company owned by Microsoft (MSFT) and that may give it privileged access to the solutions created by OpenAI – the company behind the popular AI-powered chatbot. The Redmond-based company just launched a new version of Bing that could shake up Google’s long-standing dominance of the internet search market.
The knowledge that Microsoft has on how AI can be integrated into products and services easily can be transferred to GitHub to further strengthen its value proposition and internal processes shortly.
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