South Korea’s leading online platforms and gaming publishers such as Naver Corp., Com2uS Corp. and Kakao Corp. have joined global Big Tech companies in slashing their workforce, showing little hesitance to abandon fledgling businesses if they fail to make money.
Last year, Naver’s English education app developer Cake Corp. let go of about 50 employees or half of its workers.
Naver’s software developer Snow Corp. launched the education app in 2018 with a vision to grow it into the world’s No. 1 language learning app. But it has never made a profit.
Some of the employees affected by the job cuts were transferred to its parent Naver and other affiliates, including Naver Financial, Snow and Kream Corp.
The job cuts, albeit at a small scale compared with global peers, were unprecedented for Naver and seemed to underline its determination to shift from its expansion-centered strategy.
“As competition for new technologies such as AI is intensifying amid the economic downturn, expansion-oriented growth strategies seem to have reached their limits,” said an IT industry official.
“The prevailing view is that a harsh winter is coming for the domestic IT industry.”
Kakao Enterprise Corp., a software developer under Kakao Corp., reduced its workforce by 30% in July last year.
Kakao Entertainment Corp. recently implemented the “Next Chapter Program,” which encourages employees with more than 10 years with the company to find jobs at other companies.
Com2uS, a gaming company, is receiving voluntary retirement applications from software developers this month. Last year, its metaverse service unit Com2Verse reduced its workforce, just two months after it launched a metaverse platform.
NCSoft Corp., a game developer, has been streamlining some businesses to cut expenses since October last year.
FIZZLING TALENT WAR
Amid the series of job cuts, the IT industry’s talent war has eased.
“We used to scoop up IT developers even before creating jobs, but we no longer do that,” said an executive at a Korean tech company.
He said the tech industry shows less patience with unprofitable new businesses than before.
“If a new business fails to win a market share within two to three years of launch, companies will drastically downsize it and switch to other businesses with growth potential. Such a trend will continue,” he added.
Naver halted its biannual recruitment program in the second half of last year. Since 2021, it has hired hundreds of new employees through the program every half year.
According to Layoffs.fyi, a tracker of tech industry layoffs, 1,183 tech companies around the world sacked 261,997 employees last year in aggregate. That was a 58.8% surge from 164,969 in 2022.
Amazon accounted for 10% of the total, letting go of 27,000 employees.
Meta trimmed its workforce by more than 20%, dismissing 21,000 employees last year. At X, formerly Twitter, 3,700 employees quit in 2023, about half of its staff.
Google and Microsoft laid off 12,000 and 11,000 employees in 2023, respectively.
(Getty Images) MORE TO COME
Google and Amazon have announced additional job cuts since the beginning of the year.
Amazon said last week it would lay off several hundred employees at Amazon Prime Video and Amazon MGM Studios, in addition to 500 workers at its video streaming platform Twitch.
Google said early this week that it was dismissing hundreds of employees in its advertising sales team this month.
Industry observers view the series of job cuts at Big Tech as an attempt to divert some of the labor costs into AI investments while tightening cost control.
