Apple’s high revenue per employee shows how it delayed mass layoffs

  • Apple has avoided layoffs longer than others by avoiding illogical bets and focusing on core operations.
  • Data shows that its revenue per employee trumps the rest of Silicon Valley, a sign of its efficiency.
  • Apple employees each generate $2.4 million.

Silicon Valley’s year for efficiency has been brutal, with Alphabet, Amazon, Meta, Microsoft, Salesforce and Twitter cutting more than 84,000 jobs in recent months as they seek leanness and efficiency.

One company was able to delay job cuts longer than others: Apple.

The iPhone maker has spoken of potential relatively small-scale job cuts, but has so far avoided the mass layoffs hitting its competitors.

That’s down to a number of factors, experts told Insider.

“Apple has outperformed the others and avoided the over-expansion that we have seen in some other tech companies during the pandemic period,” John Van Reenen, professor of economics at the London School of Economics, told Insider by e. -mail. “It hasn’t become big on the metaverse like Meta and its business model is less reliant on online shopping (Amazon) or remote working (Zoom).”

Apple’s comparative efficiency is visible through a particular measure that is coming back into fashion: revenue per employee.

Insider analyzed revenue per employee at major tech companies between 2018 and 2022. We found that Apple outperformed by some margin, with revenue per employee up 20% over the past five years, according to Apple. analysis of public documents. It has grown from $2 million in 2018 to $2.4 million in 2022 – a half-decade in which Apple’s employee base also grew from 132,000 to 164,000.

Revenue per employee is a back-to-basics measure of efficiency and productivity, assigning a firm monetary value to each worker. It is calculated by dividing the annual turnover of a company by the number of its employees. In the aftermath of large-scale tech job cuts, hawkish CEOs and investors say executives should take a hard look at the metric again.

“You’ll hear revenue per employee again, in tech, nobody was looking at those metrics at least in the private world, the venture capital world for at least five years,” investor Keith Rabois said during a event hosted by investment bank Evercore last month. . Rabois also criticized tech companies, particularly Google and Meta, for “overhiring” — a practice Apple shunned during the tech boom years.

Apple’s revenue per employee figures buck the general downward trend of its peers.

Twitter’s revenue per employee in 2022, which we calculated on an annualized basis using financial data from its first two quarters, fell about 18% from 2018 to 2022, the largest decline in last five years. Meta saw a 14% decline in revenue per employee over the same period, from $1.6 million to $1.3 million.

Both companies have cut jobs heavily over the past six months.

Leo Gebbie, principal analyst at CCS Insight, said Apple’s performance was due to it being “focused on its core business, which remains extremely profitable”, giving it “more cushion to get through a period of economic and geopolitical instability”.

That said, Apple is taking several austerity measures to deal with the recession, such as implementing a hiring freeze and restructuring employee bonus plans. The company has also seen revenue growth slow in 2022 as consumers in many of its key markets grapple with a cost-of-living crisis in the face of inflation.

The company’s continued ability to outperform could be tested by its complex relationship with China, as well as a potentially risky venture into mixed reality with a headset set to debut this year.

“It is likely that such an arrangement would require heavy investment before it can turn a profit and will reinforce the need for strong internal financial governance,” Gebbie added.

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