Alphabet, Google’s parent technology company, announced on Friday the dismissal of 12,000 employeesequivalent to 6% of its workforce, thus joining firms such as Amazon, Microsoft and Meta which have also made cuts in recent months due to the global economic slowdown and an overestimation of their growth prospects.
The cuts will affect both Google’s US headquarters and subsidiaries it owns around the world.
In an emailed letter to his employees, Google and Alphabet CEO Sundar Pichai lamented the cuts that will affect “incredibly talented” people.
“The fact that these changes will impact the lives of ‘Googlers’ weighs heavily on me and I take full responsibility for the decisions that led to this,” Pichai said in the letter.
As in the case of other technology companies such as Amazon, Pichai argued that the company carried out contracting processes that, although appropriate at the time, turned out to be excessive in the current economic reality where technology companies are affected by the reduction in expenses. of advertising, the return of consumers to pre-pandemic habits, and rises in interest rates that hurt the value of its shares
“In the last two years we have seen periods of dramatic growth. To motorize this growth, we contracted for a different economic reality than the one we face today”, argued Pichai in this regard.
He explained that the dismissal process is the result of a “rigorous” evaluation process in the different areas of the company, prioritizing those that are aligned “with the highest priorities.”
As in the case of Microsoft’s layoffs on Thursday announced by its CEO, Satya Nadella; Pichai clarified that the layoffs will be made in the United States with minimum notice of 60 days with six months of medical coverage; while outside that country the local legislation on the matter will be followed.
“As a company of almost 25 years, we are forced to go through difficult economic cycles. These are important times to focus, review our cost bases and direct our talent and capital to our highest priorities,” he added.
Wave of layoffs in technology
As a result of the cuts, Alphabet shares (GOOG) in the Nasdaq technology index they rose 4.5% this noon.
In the particular case of Google, the economic slowdown affected its digital advertising business, in addition to the fact that its cloud services division has not yet reached the results of competitors such as Amazon and Microsoft, said the Bloomberg news agency. .
Rumors of layoffs at Google had been circulating for months: last October, its third-quarter balance sheet did not meet market expectations with a decrease in income of 27% per year. On that occasion, Pichai anticipated that there would be spending cuts.
“The company has too many employees and its cost per employee is too high,” Chris Hohn, a director at TCI Fund Management, a firm that holds $6 billion in Google shares, said recently.
To the dismissals of Google, the 10,000 (5% of the total of its plant) of Microsoft announced Thursday, and the cut earlier this month of 18,000 employees at e-commerce giant Amazon.
Goal -parent company of Facebook, Instagram and WhatsApp- anticipated in November that it will lay off 11,000 workers, 13% of its workforce.
In the same way the tycoon Elon Musk, new owner of Twitter, laid off about 3,700 employees (50% of the positions); and Snapchat and Salesforce did the same with 1,200 (30%) and 7,000 (10%).
In all, 210,450 people have been laid off in the technology sector since last year, according to the monitoring page Layoffs.fyi, which compiles the various layoff announcements.
