Alphabet, the parent company of Google, announced on Friday that it plans to cut 12,000 jobs, which represents 6% of its global workforce. This is the company's largest ever layoff. The layoffs come as the company is focusing on its major AI launch, which is expected to take place in the spring. According to sources familiar with the matter, Google plans to unveil more than 20 new products and a search engine with chatbot features.
The job cuts are a result of the ongoing economic challenges caused by rising interest rates and inflation. Google CEO Sundar Pichai stated that the company had expanded too rapidly during the pandemic, when demand for digital services boomed, and must refocus on products and technology core to its future, like artificial intelligence. He said, "We hired for a different economic reality than the one we face today." Google is not the only technology company to lay off workers, other firms such as Amazon, Meta, Microsoft, Salesforce, and Twitter have also announced thousands of job cuts. According to Layoffs.fyi, a website that tracks the industry, technology firms have cut more than 190,000 jobs since the start of 2022.
Among those losing their jobs are recruiters, corporate staff and people working on engineering and product teams, Pichai said. Google has cut most jobs at Area 120, its in-house incubator for new projects, a company spokesperson told Reuters.
The Alphabet Workers Union said in a statement that the company's leadership taking "full responsibility" was "little comfort."
"It's appalling that our jobs are first on the chopping block so shareholders can see a few more points in a chart next quarter," the union said.
In the United States, where Alphabet has already emailed affected employees, staff would receive severance and six months of healthcare as well as immigration support.
Overseas, layoff notifications will take longer due to local employment laws and practices, Pichai said in the memo. Employees in Asia will learn starting in February if the reduction impacts them.
Sundar Pichai, the CEO of Alphabet, sent out a memo to the company's staff on Friday to announce the layoffs. In the memo, Pichai said, "We’ve decided to reduce our workforce by approximately 12,000 roles. We’ve already sent a separate email to employees in the US who are affected. In other countries, this process will take longer due to local laws and practices." He added that the company has hired for a different economic reality than the one they currently face and that they have undergone a rigorous review to align their people and roles with their highest priorities. Pichai also said that the company will support the employees who are being laid off, and will offer them severance packages and other benefits.
The layoffs come as a surprise, as Google has been one of the few companies to have not been affected by the economic slowdown caused by the COVID-19 pandemic. However, with rising interest rates and inflation, the company has had to adjust its plans and focus on its core business. The layoffs will have a significant impact on the employees and their families, and it remains to be seen how the company will support them during this difficult time.
The move from Google to layoff 12,000 employees is a significant one, and it will likely have a ripple effect on the wider economy. According to the Bureau of Labor Statistics, the unemployment rate in the US was at 6.7% in December 2020. The layoffs announced by Google will likely increase this number, putting more pressure on the government to provide support for those who have lost their jobs.
It's also worth noting that this is not the first time Google has had to lay off employees. In 2008, the company laid off around 200 employees, primarily in its sales and marketing departments, due to the economic downturn caused by the financial crisis. However, this time the layoffs are much more significant and widespread, affecting employees across the globe.
In addition to the economic impact, the layoffs will also have a significant impact on the company's culture. Google has been known for its unique culture and its ability to attract and retain top talent. However, the layoffs may make it more difficult for the company to attract and retain top talent in the future, as employees may be hesitant to join a company that is laying off such a large number of employees.