Sundar Pichai, the head of Alphabet, the parent company of Google, justified the elimination of these 12,000 jobs with the current situation forcing the company to reduce its workforce, which accounts for 6% of its workforce . Google has thus become the latest American tech giant to launch a large-scale social program.
The layoff plan affects 6% of Google’s workforce
After a surge in hiring during the Covid-19 pandemic, the tech industry continues to be hit by a wave of mass layoffs: Google is the latest US tech giant to announce plans for mass layoffs. On Friday Jan. 20, Sundar Pichai, the head of parent company Alphabet, said 12,000 jobs would be cut.
“Over the past two years we have experienced periods of spectacular growth. To support and fuel this growth, we have taken on an economic reality different from the one we are facing today”, writes the CEO, who assures “that he assumes full responsibility for the decisions that [les] drove here”.
With more than 150,000 job cuts in the US last year, it’s now up to Google to announce a major layoff plan. At the end of September 2022, Alphabet had nearly 187,000 employees worldwide. As a result, this wave of layoffs accounts for just over 6% of its workforce.
The cuts affect “all divisions, functions, levels of responsibility and regions,” the chief executive said, without providing further details.
If affected US employees have already been notified, the process in other countries will take longer based on local labor laws.
In the US, terminated employees will receive at least 16 weeks of pay, bonuses through 2022, paid vacations and six months of health insurance. Foreign employees domiciled in the United States will also be eligible for assistance with legal proceedings if they wish to remain in the United States.
The end of technological hypergrowth?
Google will announce its 2022 financial results on February 2. Like the tech sector as a whole, the group has been hit by a worsening economic backdrop, which has encouraged its professional clients to be cautious about spending on advertising and cloud services.
The announcement follows Microsoft’s announcement on Tuesday that it was cutting 10,000 jobs. On the same day, Amazon notified thousands of employees that they would lose their jobs. In total, the e-commerce giant has cut more than 18,000 jobs since November.
“Tech stalwarts have been hiring at an unsustainable pace and the deteriorating macro environment is now forcing them to layoffs,” said Wedbush Securities’ Dan Ives. “Midnight struck for hypergrowth as tech companies spent money like rock stars in the 1980s,” the analyst continued.
Alphabet posted its weakest growth in nine years in October barring the onset of the pandemic. As a result, third-quarter net income of $14 billion fell well short of expectations.
In other words, while Google is still profitable, its advertising revenue is down. US revenue reached $69.1 billion in the third quarter, up 6% from a year ago.
After a good time, especially during the height of the Covid-19 pandemic and lockdowns, amid high inflation and rising interest rates, the tech sector is now having a tougher time.
Nearly 194,000 U.S. industrial workers have lost their jobs since the start of 2022, according to industry site Layoffs.fyi, not counting Friday’s announcement from Alphabet.
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