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With the macroeconomic slowdown affecting the company’s revenue in recent quarters, PayPal Holdings Inc. announced it will lay off 2,000 employees. The 7% of employees who will be affected by the cuts will be affected in the upcoming weeks; Chief Executive Officer Dan Schulman informed staff in a memo. While right-sizing the cost structure and concentrating the resources on their top strategic priorities have seen significant improvement, Schulman noted that there is still plenty to be done. The slowing in platform-wide volume growth once the pandemic started to abate has hurt PayPal’s stock. In response, the business has committed to cutting costs, including eliminating jobs and closing locations around the nation. A majority of PayPal’s annual revenue comes from the gambling industry and decisions such as these could majorly impact PayPal as a payment choice across popular gambling aggregator sites such as Players Best. In an effort to reduce costs during the economic recession, PayPal will eliminate 2,000 employees. According to Schulman, those actions should have enabled the corporation to save $900 million last year and at least another $1.3 billion in 2023. The 65-year-old CEO has made no secret of his intentions to increase his company’s operating leverage or capacity for quicker revenue growth.
The Reason Behind the Job Cuts: 3.3 Million by 2024 Estimated
There are common elements among the reasons why different businesses lay off people. Many tech companies rely heavily on online advertisements for revenue, but the future of the advertising industry is looking bleak. Businesses are now dealing with more pushback to their invasive advertising tactics. And as the economy suffered, many businesses cut their spending on web advertising. Companies have been impacted by higher interest rates in the financial technology sector. Investors have increased the pressure on companies to reduce expenses by claiming that they are bloated and reluctant to act when there are signs of a slowdown.
Thousands of employees are already being let go by some of the largest companies in the globe due to the faltering global economy. Nearly three years after Covid-19 debuted, businesses all across the world continue to lament their inability to get the talent they require. They are concerned about a labor scarcity that will probably continue past the pandemic and the upcoming recession. The pool of candidates they can choose from for employment is getting smaller due to deeper dynamics like demographic shifts and immigration. All of this implies that many businesses are attempting to keep their current personnel rather than letting them go in order to hoard labor that they will need once the economy picks up speed again, despite the fact that demand for their goods and services is declining. While small businesses are struggling to gather investments and funds along with devising innovative payment & invoicing integrations to automate certain financial processes, this could lead to more job cuts. In developed economies, according to Bloomberg Economics, there will be an increase in unemployment of around 3.3 million by 2024, a time when most are predicted to experience recessions. Even though there have been a lot of job losses, the size of the two most recent global recessions dwarfs that number, which is less than the 5.1 million jobs lost during the comparatively moderate downturn that started in 2001.
Conclusion
PayPal’s stock has increased by 14% in 2022, beating the S&P 500 Information Technology Index’s 9% growth. PayPal, like many other ‘pandemic darlings,’ saw its headcount rise as more people started shopping online as a result of the virus forcing lockdown orders from governments all around the world. Consumers have flocked back to in-store shopping in droves as a result of those orders being lifted, but supply networks are still under strain. According to expert projections published by Bloomberg, PayPal is anticipated to announce that the number of payments processed across its numerous platforms increased to $1.4 trillion in 2017. The numbers show that even while that represents a rise of 9.6% from a year earlier, it would still represent the lowest level of growth in the company’s history as a public corporation. Schulman further added that “As the globe, our customers, and our competitive environment change, we must also adapt”.
