Alphabet, Google’s parent company has announced it’s cutting 12,000 jobs worldwide, the latest company in the series of layoffs that have characterized the tech industry over the past one year.
The cuts were announced by CEO Sundar Pichai in a memo to employees, which was later published on the company’s blog.
“I have some difficult news to share. We’ve decided to reduce our workforce by approximately 12,000 roles,” he said, adding that affected employees in the US have been informed.
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The tech industry is grappling with economic headwinds that have forced many companies to cut workforce. Microsoft announced days ago it’s laying off about 10,000 workers, joining others like Meta, Twitter and Amazon, forced to reduce headcount.
The 12,000 employees account for 6% of Alphabet’s global workforce. Pichai said the change, which cuts across many areas of the company, was orchestrated by the decisions earlier made based on the dramatic growth of the past two years. To match and fuel that growth, we hired for a different economic reality than the one we face today, he said.
“I am confident about the huge opportunity in front of us thanks to the strength of our mission, the value of our products and services, and our early investments in AI,” he said. “To fully capture it, we’ll need to make tough choices. So, 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. The roles we’re eliminating reflect the outcome of that review. They cut across Alphabet, product areas, functions, levels and regions.”
Pichai said employees in the US will receive the following support: payment during the full notification period (minimum 60 days); severance package starting at 16 weeks’ salary plus two weeks for every additional year at Google, and at least 16 weeks of GSU vesting. He said they’ll be paid 2022 bonuses and remaining vacation time, and will be offered 6 months of healthcare, job placement services, and immigration support for those affected.
“Outside the US, we’ll support employees in line with local practices,” he added.
The American tech sector is facing a different reality from when many companies, spurred by thee pandemic-induced economic growth, made the decision to expand their headcounts. Global economic downturn, compounded by the Russia-Ukraine conflict, has severely dented the industry’s economic outlook.
Among the many challenges currently facing the sector is rising interest rates as countries tighten economic policies to battle inflation over the past year. The result has been consequential to the industry’s growth as tech shares take pounding, forcing advertisers to cut back on online ad spending.
As CNBC noted, the gloomy macroeconomic climate has in turn piled pressure on those companies, forcing them to cut their workforces.
Update: This is how Apple has avoided job losses unlike other big tech: “As layoffs sweep across the tech industry, Apple has so far managed to avoid workforce cuts. But how? There are many factors, The Wall Street Journal writes, but some of them are simple and straightforward. Apple didn’t hire at the same clip as its rivals, and it “tends to run lean,” with fewer employee perks than elsewhere in Silicon Valley. The iPhone maker hasn’t emerged from this difficult period unscathed, however. Next month it’s expected to report a decline in quarterly sales for the first time in more than three years, WSJ reports.”