The company laid off 6 percent of its global workforce, making it the latest tech giant to cut after a hiring frenzy.
Alphabet, Google’s parent company, announced Friday that it would cut 12,000 jobs. This is the latest tech company to make a reduction in its workforce due to concerns about an economic slowdown.
These job cuts represent 6 percent of the company’s global workforce. Sundar Pichai said that Alphabet had grown too quickly during the pandemic when demand for digital services soared. The chief executive stated that the company must refocus its efforts on the products and technology it needs to be successful in the future like artificial intelligence.
In a note to employees, Mr. Pichai stated that “we hired for a other economic reality than what we face today.”
Google joins the list of tech companies that have cut workers following a conclusion that they had overextended themselves under the assumption that the pandemic-fueled boom was a new normal. Among others, Amazon, Meta and Microsoft have all announced thousands of job losses.
According to Layoffs.fyi.com, a website that tracks the industry, technology firms have eliminated more than 190,000.
These moves are the end of an era of rapid growth in technology, during which employees were pushed for high salaries and lavish perks. Google was founded in 1998 and has influenced many corporations beyond Silicon Valley.
Alphabet, a company based in Mountain View (Calif.), had almost 187,000 employees as of September. This is an increase from the 150,000 that was reported a year ago.
In a note entitled “A difficult decision for us to set ourselves up for the future”, Mr. Pichai stated that job cuts would affect all product areas, job responsibilities, and locations. This future will see increased competition from other companies offering new ways for people to search the internet. ChatGPT, an OpenAI chatbot, has amazed users with its clear written answers to their questions.
“These are crucial moments to sharpen your focus, re-engineering our cost base, and directing our capital and talent to our highest priorities,” Mr. Pichai stated. “Being limited in certain areas allows us bet big on other areas.”
Google declared a code red last month in response to ChatGPT. Mr. Pichai reorganized existing projects to focus on artificial intelligence. Google cut back on lower priority projects as a result of the job cuts.
Google Research is a key pillar of A.I. According to an email sent by Jeff Dean, senior vice president for research and health, to his employees, he has reduced roles in areas that have not received much attention, such as health care. The company will streamline its investments in Google for Clinicians (a tool for healthcare providers), to reduce costs. Mr. Dean said that Alphabet and Google also consolidated robotics efforts.
Google Cloud, which had been growing at an alarming rate over the past few years, saw its staff decrease. In an email to employees, Thomas Kurian, Google Cloud’s chief executive, stated that today’s news “primarily affected positions that weren’t customer facing, non-engineering, and operational in nature.” To support its growth, he said that the division would continue to recruit in strategic areas such as product development and customer-related positions.
X, Alphabet’s moonshot factory, which incubates new businesses, has fired its strategy and business operations staff, according to two people who knew about the cuts but were not permitted to discuss them. Many of the companies created in X have not been able to generate substantial revenue or become profitable.
Other parts of the company saw reductions. One person claimed that Google had fired 16 percent from its Fuchsia group, which included about 400 employees who were working on operating systems for company home devices. One team that was responsible for data center maintenance saw its staff cut. Other engineers, users-experience researchers, and product designers were also affected.
Alphabet and the other tech giants are cutting their workforces and promising to be more efficient, but they still remain highly profitable. Alphabet reported a profit of $76 Billion and a revenue of almost $258 Billion in 2021.
Alphabet Workers Union, which has 1,100 members, condemned the cuts.
Parul Koul, executive chair of the union, stated in a statement that “With billions of profits and executive compensation unaltered, our jobs shouldn’t be on the cutting block.”
However, the slumping global economy and rising interest rates have not spared the technology industry. Alphabet’s bottom line suffered as the advertising market falters and companies purchase fewer ads on Google or YouTube. Alphabet’s cloud computing business continues to trail Microsoft and Amazon. Alphabet reported that its quarterly net profit fell 27 percent in October.
Wall Street analysts applauded Alphabet for its move. Evercore ISI’s Mark Mahaney wrote in a research paper that job cuts were necessary to maintain profit. Alphabet’s stock price climbed more than 5 percentage after Friday’s announcement. On February 2, the company will release its financial results 2022.
Google employees had been anticipating job cuts after other tech companies announced job losses. Many workers were aware that Google was planning to lay off employees after closing some smaller offices and releasing a new employee assessment system. This was meant to help identify underperformers.
The announcement of layoffs was made in the middle of the American night, when many affected employees were still asleep. They woke up to receive text messages and news stories, as well as the realization that Google’s corporate systems were no longer accessible to them.
Chewy Shaw was a site reliability engineer at YouTube and was fired on Friday. He said that the speed and scale of the layoffs were infuriating. Shaw stated that “the authorities on top can come down at any unexpected moment and just snap their fingers and you’re gone.”
Alphabet announced that U.S. employees will receive a severance package, which included 16 weeks’ salary plus two weeks extra pay for each year they worked at Google. Six months of health care will be provided to laid-off workers. The company stated that compensation for workers working outside the United States would be determined by local labor laws.