Google cutting 12,000 from its payroll to compensate for pandemic-era errors

The news: Google-parent Alphabet will make the deepest cuts to its global workforce in company history.

• In a memo sent to staff on Friday, CEO Sundar Pichai announced the “difficult decision” to slash 6.4% of its global workforce, totaling about 12,000 employees, per Insider.
• The layoffs will affect all product areas, levels, and regions including recruitment, corporate teams, and Google’s many engineering and product teams.
• Alongside the cuts, the tech giant will also delay a portion of employee bonus payouts.

The announcement is part of a steady march of tech layoffs affecting over 55,000 workers so far this year, per Layoffs,fyi, including a bloodbath of cuts at Amazon, Microsoft, Salesforce, and many more.

• Last week, WeWork terminated 300 jobs globally.
• Wayfair will cut 1,750 jobs, or about 10% of its headcount.

Didn’t read the tea leaves: The layoffs at Alphabet, Microsoft, Amazon, and Meta, make Apple the only Big Tech player that hasn’t announced a major talent trimming.

• Unlike its peers, Apple’s decision to not embark on bold pandemic-era growth is a likely contributor.
• The iPhone-maker added less than 7,000 employees between September 2020 and September 2021.
• In 2022, it grew by 6.5%, which was a modest uptick compared with other Big Tech companies’ double-digit increases, per CNBC.

The four tech giants’ overzealous growth between 2020 and 2022 is a crucial factor behind the layoffs.

• It points to executives’ plans for unbridled growth while not accounting for wild cards emerging from a precarious global environment.
• The misstep will likely push the industry toward more practicality and away from past excesses even if anticipated recovery provides relief by the end of 2023.

What’s next? Google isn’t just concerned about economic headwinds. Microsoft’s generative AI crusade is setting off market share alarm bells.

• Microsoft’s plan to integrate ChatGPT and similar tech from OpenAI across its product lines poses a threat to Google’s legacy tools like Search and Docs.
• We can expect big AI investments and announcements from Google this year as the tech giant scrambles to monetize generative AI while avoiding ethical and legal problems from the technology.
• Despite the specter of a recession, China’s reopening could give Google and other tech companies an economic boost.

Laid-off Googlers will likely fare well and be welcomed by other industries. Hiring of entry-level software engineers jumped by 36% for the government and 28% for the construction industry between January 2021 and December 2022, per Bloomberg.

This article originally appeared in Insider Intelligence's Connectivity & Tech Briefing—a daily recap of top stories reshaping the technology industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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