Goldman Sachs Massive Job Cuts — Estimated 6.5% Downsize, Solomon Backlash

Goldman Sachs, one of the biggest and most known financial companies in the world, has lately announced a substantial wave of job losses as the business seeks to address dwindling earnings and adapt to the continued economic uncertainties. 

Up to 3,200 people, or around 6.5% of the bank's workforce, are expected to be affected by the layoffs, with many of the affected workers located in the United Kingdom.

As economic uncertainty, the current banking recession and other reasons have placed pressure on lenders this year, these job losses are among the greatest thus far. 

Goldman Sachs is not just reducing positions, but also reevaluating its spending practices, such as bonuses and the company's recent acquisition of two private planes. 

The 2019 purchase of the planes was seen as a departure from the company's past stance and was met with widespread disapproval.

This year, Goldman Sachs, which now employs roughly 49,000 employees throughout the globe including around 6,000 in the UK, has eliminated hundreds of positions. 

These reductions follow a period of heavy recruiting that resulted in a staff growth of over 10,000 individuals between December 2018 and February 2019. The bank typically eliminates 3-5 per cent of its personnel every year as part of its Strategic Resource Allocation process, but this year the number of layoffs is much higher.

Tech Firms Preparing to Weather the Storm

Companies throughout America are cutting jobs as they try to save money to weather the economic slump, and the IT industry and Wall Street have been at the forefront of this trend.

Companies like Amazon, Walt Disney, Facebook owner Meta, and American banks have all had to lay off employees as a result of rising interest rates, falling consumer demand, and a downturn in China's economy.

Layoffs Analytics predict that in 2023, as the demand spike caused by the epidemic quickly fades, technology businesses will lay off more than 150,000 people.

As growth in the world's largest economies slows, further layoffs are predicted.

Some of the top American corporations that have announced layoffs in recent weeks are listed below.

Businesses in the IT, media, and telecom industries:

Amazon: Over 18,000 workers, according to the e-commerce behemoth, would be affected by company-wide layoffs.

Meta: Faced with a poor advertising market and rising expenses, Facebook's parent company said it will lay off 13% of its personnel, or more than 11,000.

Intel: In an interview with Reuters, CEO Pat Gelsinger said that “people measures” will be taken to save costs. The chipmaker has promised a $3 (£24)billion reduction in expenses by 2023.

Microsoft: As Axios reported, citing a source, the software giant lay off less than a thousand workers across many departments in October.

Twitter: After Elon Musk purchased the social media giant for US$44 (£36) billion, he immediately began a programme of widespread layoffs across all departments, from communications and content curation to product and engineering.

Lyft: After reducing 60 positions earlier this year and freezing recruiting in September, the ride-hailing company said it will lay off 13% of its staff, or approximately 683 individuals.

Salesforce.com: The software firm said it will liquidate several offices and lay off around 10% of its workforce as part of a reorganisation plan, blaming the difficult economic climate.

Cisco Systems: The provider of networking and collaboration solutions has announced plans to reorganise, which may result in the layoff of up to five percent of its current staff. The initiative is estimated to cost the corporation $600 (£495) million and will commence in the second quarter of the fiscal year 2023.

David Solomon Defends Move Amid Revenue Decline, Receives Backlash

However, CEO David Solomon, who is experiencing a swift backlash, has expressed concern about the economy on many occasions in recent months, noting that customers were becoming cautious and that the current climate prompted him to consider cost-cutting measures.

As part of a massive cost-cutting investigation, Goldman Sachs announced on Wednesday that it is looking into the price tag of the private jet excursions preferred by CEO David Solomon and other senior executives.

According to the Financial Times, citing people familiar with the situation, Goldman's usage of its two Gulfstream private planes is “one of the most sensitive areas” of spending facing a budget review conducted by the bank's chief administrative officer Ericka Leslie.

Goldman Sachs was conducting a cost assessment as it prepared to lay off 3,200 employees this week, a move intended to strengthen the troubled bank's financial situation in the face of falling revenue and an impending economic slump.

Solomon’s move is in response to that harsh economic reality. When compared to 2021, when business was thriving, the bank's first nine months of this year saw a decline of 20% in total revenues. The decline in profits was significantly more severe than previously reported.

As economic uncertainty grows and the market slump dampens acquisitions and stock listings, Morgan Stanley and Citigroup are among the other large banks that have reduced employment in recent months.

Mr. Solomon has been under fire since he took over as CEO of the investment firm Goldman Sachs in 2018. He has been with the company since 1999.

Goldman's attempts to diversify have failed while those of its competitor, Morgan Stanley, have been successful.

October saw the bank provide hints that it was abandoning Marcus, the consumer-oriented internet bank it had established the previous year.

Outlook for Banks in 2023

This move is not unique to Goldman Sachs, as companies throughout America are cutting jobs in an effort to save money and weather the economic slump. In 2023, as the demand spike caused by the epidemic quickly fades, technology businesses are predicted to lay off more than 150,000 people. 

With the growth in the world's largest economies slowing, further layoffs are expected. The banking industry is not alone in this trend, with companies in the IT, media, and telecom industries also announcing layoffs in recent weeks. It's worth noting that CEO David Solomon has defended the move, citing the decline in revenue as a reason for the job cuts.

Goldman also faces steep competition from digital banks like Starling and Monzo.