The Cupertino, California-based company resorted to this move to avoid mass retrenchment of direct hires. Other companies such as Amazon, Google, Meta and Microsoft were forced to lay off tens of thousands of workers. Apple instead targeted hundreds of its contractors – workers employed by outside agencies who work alongside Apple employees on projects – to further cut down on overhead costs, according to sources familiar with the matter.
According to the New York Post, Apple has been firing contractors outright instead of waiting for their contracts – which are typically renewed every 12 to 15 months – to expire. Analysts say that firing contractors would be convenient because the company won't have to pay severance or "face potential litigation from employees alleging wrongful termination."
While Apple has not disclosed the size of its contractor workforce, past reports suggest it numbers in the thousands. Three dozen staffing firms help the company with managing projects, launching events and creating tools such as Apple Maps.
According to Layoffs.fyi, a website that tracks layoffs in the tech industry, 312 companies have laid off more than 97,000 workers since January of this year.
Fortune magazine Senior Editor Geoff Colvin noted that layoffs are actually counterproductive as there are hidden costs. His remarks challenge the notion that layoffs would help companies such as Apple cut costs. (Related: Layoff saga continues as 12 more companies announce mass employment terminations.)
"Some companies learned this lesson the hard way in past downturns," he wrote. "In the prelude to the Great Recession, Northwest Airlines fired hundreds of pilots. When business recovered, it couldn't hire pilots fast enough and lost millions of dollars of revenue from canceled flights."
In an interview with the Wall Street Journal, Cook admitted that the company has made changes to its spending and hiring plans. He mentioned how Apple is "managing costs very tightly [by] scaling back hiring in some areas while continuing to hire in others."
On the issue of layoffs, Cook went on to say that they would be a "last resort" and that Apple would prefer to manage costs in other ways.
"I think layoffs are a last resort. There are no absolutes in this world. We hope to manage costs in other ways to the extent we can," he said. However, this did not prove to be the case.
One contractor said he was blindsided because Apple management had assured him that all jobs were safe. Sources even said just a few weeks ago that Apple boasted that it hadn't over-hired like other tech companies.
Insiders who reached out to the Post said some contractors are complaining about being treated like second-class citizens. Deprived of stock options, health insurance and other perks, they are forced to work more than a mile away from Apple's "spaceship" headquarters facility. This separate facility boasting of relatively "ho-hum architecture" also lacked free snacks, they said.
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