Apple which thus far has been the only Big Tech company to avoid mass layoffs has reportedly started sacking third-party contractors.
The iPhone maker has begun severing ties with hundreds of contractors quietly.
Their relationship with Apple
These workers were hired by third-party agencies but work with Apple employees on projects.
They typically have contracts of up to 15 months with Apple, however as the New York Post reported, “Instead of waiting for contracts that are typically renewed every 12 to 15 months to expire, Apple is firing contractors outright.”
This is apparently a move to cut costs.
One of the contractors reportedly said that Apple previously assured the workers that their jobs were safe, a promise it has now broken.
“Never say never”
The company hasn’t disclosed the size of its contractor workforce, but reports say it may number into the thousands.
CEO Tim Cook had called layoffs at the company a “last resort kind of thing”, adding that “You can never say never”.
He had told the Wall Street Journal that Apple is “managing costs very tightly and is curtailing hiring in certain areas, while continuing to hire in others.”
“We want to manage costs in other ways to the degree that we can,” he was quoted.
Revenue hit due to China
October and November were difficult months as it faced supply chain disruptions due to the Covid surge in China and protests at its key supplier Foxconn’s main factory in the country.
Cook said that Covid-related challenges “significantly impacted the supply of iPhone 14 Pro and iPhone 14 Pro Max and lasted through most of December”.
As a result of these challenges “our revenue was down 5 per cent year over year”, he added.
Going good till now
Wedbush tech analyst Dan Ives says that Apple didn’t overhire during the pandemic as the other major firms announcing mass layoffs have had.
Its employee count went up by about 7 per cent in 2022 compared to 2021.
Cook has already taken a huge pay cut of $35 million, or more than 40 per cent of his compensation.
Contractors considered disposable
One reason Apple has maintained silence over this development may be the fact that the firm doesn’t consider contractors as their employees and so job cuts for such workers are not regarded as layoff in the company.
Firing contractors is an easier choice considering it won’t have to pay severance or “face potential litigation from employees alleging wrongful termination,” a report from NYT said.
