Google is making more cuts to trim spending and save costs as the economic downturn takes a toll on the tech industry. The tech giant which announced layoff of about 12,000 staff in January, said in a rare company wide email firstly reported by Wall Street Journal, that it is making cuts to employee services.
In the email titled: “Our company-wide OKR on durable savings,” Google’s finance chief Ruth Porat described the recent move as “big, multi-year efforts.” It involves cutting back on fitness classes, staplers, tape and the frequency of laptop replacements for employees, according to a separate document seen by CNBC.
One of the company’s important objectives for 2023 is to “deliver durable savings through improved velocity and efficiency.” Porat said in the email. “All PAs and Functions are working toward this,” she said, referring to product areas. OKR stands for objectives and key results.
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Alphabet, Google’s parent, like several other companies in the tech sector, is making the difficult decision to cut its workforce as sales’ decline eclipses the pandemic-induced growth that inspired massive hiring. The 12,000 workers laid off in January, which represents about 6% of its workforce, includes more than two dozen on-site massage therapists.
That marks the company’s decision to extend the cuts to other areas. CNBC reported that Google declined to pay the remainder of laid-off employees’ maternity and medical leaves.
In her email, Porat made reference to the January layoff, describing it as “the hardest decisions we’ve had to make as a company.”
“This work is particularly vital because of our recent growth, the challenging economic environment, and our incredible investment opportunities to drive technology forward — particularly in AI,” Porat’s email said.
She also made reference to the year 2008, twice in her email. Porat said in the email that “We’ve been here before,” citing 2008, when the company’s expenses were growing faster than revenue.
“We improved machine utilization, narrowed our real estate investments, tightened our belt on T&E budgets, cafes, micro kitchens and mobile phone usage, and removed the hybrid vehicle subsidiary.
“Just as we did in 2008, we’ll be looking at data to identify other areas of spending that aren’t as effective as they should be, or that don’t scale at our size,” she said.
A Google spokesperson told CNBC that “we have a company goal to make durable savings through improved velocity and efficiency. As part of this, we’re making some practical changes to help us remain responsible stewards of our resources while continuing to offer industry-leading perks, benefits and amenities.”
Cutting down on desktop PCs and staplers
Highlighting the plan to cut down on services, CNBC reports on areas that will be affected:
Among the equipment changes, Google is pausing refreshes for laptops, desktop PCs and monitors. It’s also “changing how often equipment is replaced,” according to internal documents.
Google employees who are not in engineering roles but require a new laptop will receive a Chromebook by default. Chromebooks are laptops made by Google and use a Google-based operating system called Chrome OS.
It’s a shift from the range of offerings, such as Apple MacBooks, that were previously available to employees. “It also provides the best opportunity across all of our managed devices to prevent external compromise,” one document about the laptop changes said.
An employee can no longer expense mobile phones if one is available internally, the document also stated. And employees will need director “or above” approval if they need an accessory that costs more than $1,000 and isn’t available internally.
Under a section titled “Desktops and Workstations,” the company said CloudTop, the company’s internal virtual workstation, will be “the default desktop” for Googlers.
In February, CNBC reported the company asked its cloud employees and partners to share desks by alternating days and are expected to transition to relying on CloudTop for their workstations.
Google employees have also noticed some more extreme cutbacks to office supplies in recent weeks. Staplers and tape are no longer being provided to print stations companywide as “part of a cost effectiveness initiative,” according to a separate, internal facilities directive.
“We have been asked to pull all tape/dispensers throughout the building,” a San Francisco facility directive stated. “If you need a stapler or tape, the receptionist desk has them to borrow.”
A Google spokesperson said staplers and tape continue to be offered companywide but did not provide details.
‘We’ve baked too many muffins on a Monday’
Google’s also cutting some availability of employee services.
“We set a high bar for industry-leading perks, benefits and office amenities, and we will continue that into the future,” Porat’s email stated. “However, some programs need to evolve for how Google works today.”
“These are mostly minor adjustments,” stated a separate internal document from the company’s real estate and workplace team. The document said food, fitness, massage and transportation programs were designed for when Googlers were coming in five days a week.
“Now that most of us are in 3 days a week, we’ve noticed our supply/demand ratios are a bit out of sync: We’ve baked too many muffins on a Monday, seen GBuses run with just one passenger, and offered yoga classes on a Friday afternoon when folks are more likely to be working from home,” the document stated.
As a result, Google may close cafes on Mondays and Fridays and shut down some facilities that are “underutilized” due to hybrid schedules, the document states.