Company's CEO Pichai says cuts will 'sharpen our focus' towards new priorities
NEW YORK: Google’s parent company Alphabet announced Friday it will cut about 12,000 jobs globally, citing a changing economic reality as it became the latest US tech giant to enact large-scale restructuring.
The layoffs come a day after Microsoft said it would reduce staff numbers by 10,000 in the coming months, following similar cuts by Facebook owner Meta, Amazon and Twitter as the tech sector girds for economic downturn.
The cuts follow a major hiring spree during the height of the coronavirus pandemic when companies scrambled to meet demand as people went online for work, school and entertainment.
"Over the past two years we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today," Alphabet CEO Sundar Pichai said in an email to employees.
"We’ve undertaken a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company," Pichai said, adding that the workforce would be reduced by around 12,000 positions.
"The roles we’re eliminating reflect the outcome of that review."
Alphabet employed nearly 187,000 workers worldwide at the end of September 2022. The cuts represent a little over 6% of its total workforce.
Pichai said American employees have already been notified about the cuts while reductions in other countries will take longer due to local labor laws.
The cuts will be "across departments, functions, levels of responsibility and regions," Pichai added.
"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 us here."
Pichai said that the cuts would "sharpen our focus" towards new priorities, pointing to the necessity of investing even more in artificial intelligence.
"Being constrained in some areas allows us to bet big on others," he said.
Google’s world-dominating search engine has found itself under pressure with the emergence of ChatGPT, a Microsoft-backed chatbot that can generate elaborate, human-like content in just seconds.
Microsoft has said the technology will be used to strengthen Bing, the longtime rival to Google search.
Pichai announced severance packages for US employees, who will receive at least 16 weeks of salary, their 2022 bonus, paid vacations and six months of health coverage.
He said he remained "optimistic about our ability to deliver on our mission, even on our toughest days."
Wall Street welcomed the cuts: Alphabet shares rose by 3.5% in electronic trading before the stock market opened.
This tracked the effect of job cuts on other tech giants, with Meta’s share price up 35% since it announced 11,000 job cuts on November 9 and Amazon’s stock was up 13% since 18,000 people were let go earlier this month.
Analysts have said tech’s big guns had previously overspent, not seeing a slowdown on the horizon.
Daniel Ives of Wedbush Securities said the layoffs highlight a long period of irresponsible spending across a sector basking in "hypergrowth."
"The reality is tech stalwarts overhired at a pace that was unsustainable and now darker macro is forcing these layoffs across the tech space," he said.
According to tech site Layoffs.fyi, nearly 194,000 industry employees have lost their jobs in the US since the beginning of 2022, not including those announced by Alphabet on Friday.
Hewlett Packard and cloud computing giant Salesforce also announced major cuts this month as rampant inflation and rising interest rates have slowed growth.