Why is the Non-Tech world laying off employees? | Macroeconomics | Pavan Sathiraju
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While many companies across the world are doing layoffs and most sectors are showing negative growth, there are some sectors performing exceptionally well. One of the primary reasons behind layoffs in 2023 was said to be over-hiring. But some companies like SAP, IBM, and DAO Chemicals did expand their workforce exponentially during the pandemic. But they still announced layoffs recently. That’s why we can say there are other reasons than over-hiring responsible for layoffs.
In this video, I’ve analyzed a few companies from a supply chain perspective. DAO chemicals announced layoffs to optimize cost structures and in response to macroeconomic conditions and the energy crisis in Europe. One of the main inputs in manufacturing the products of these chemical companies is oil. It is used to maintain the temperature of the place where these chemical operations take place. DAO chemical's quarterly results show that their revenues have come down 4-5% but the profits have come down by 56%. This is because of the increase in input costs. Other chemical companies like BASF Germany have also announced cost-cutting measures.
There are other companies in which oil is the end product. Exon Mobil shares have increased by 56% because the price of their end product has increased. Customers are paying a higher price for gas and oil. Once the oil and gas crisis has settled down then the chemical industry might rebound and the oil industry may come down to its old level. Another sector impacted by the macroeconomic situation is BFSI. Banking Industry serves as a glue that holds the economy together. But right now the buyers and sellers on both sides are playing a waiting game. One is waiting for the prices to come down while the other is waiting for the situation to become normal so they can command higher valuations.
But one industry that is growing at a staggering rate is the cloud services industry. TCS, Infosys, HCL, and IBM have mentioned that their cloud revenues are going up. This sector shows hope and promise for these companies. After this, the retail industry is also in a unique position because the cost of palm oil, one of the most widely used inputs in their products is decreasing. Hope this helps you understand how the supply-side dynamics and the macroeconomic conditions are impacting businesses across the world.
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Chapters
0:00 - Intro
0:30 - Other reasons for layoffs
1:18 - Chemicals Industry
2:40 - Oil and Gas Industry
3:34- Banking Sector
4:30 - Cloud Technology
5:28 - Retail Industry
6:35 - Summary
7:05 - Outro