'We hired for a different economic reality than the one we face today.” Google is the latest tech giant to cut thousands of workers.
Alphabet, the tech behemoth’s parent company, said Friday it was cutting 12,000 jobs as it navigates an unexpected downturn. “Over the past two years we’ve seen periods of dramatic growth,” CEO Sundar Pichai told employees in a letter to employees.
“To match and fuel that growth, we hired for a different economic reality than the one we face today.”Like other tech giants, Google saw a surge in demand for technology products and services as businesses and consumers embraced a sharp pivot to remote work when the pandemic lockdowns hit in 2020. But then the global economy began to slide, hit by inflation, rising interest rates and international tensions led by Russia’s invasion of Ukraine. A sharp drop in demand has forced many tech companies to scale back. “As an almost 25-year-old company, we’re bound to go through difficult economic cycles,” Pichai also said. “These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities.” Wall Street welcomed the move as Alphabet’s stock rallied more than 4% on Friday. Wedbush analyst Daniel Ives said the tech job cuts were not surprising as the industry’s “Cinderella ride” comes to an end, referring to more than 10 years of impressive expansion. “We also expect a major theme will be tech layoffs as Silicon Valley after a decade of hyper growth now comes to the reality of cost cutting mode to get through this economic storm with Alphabet the latest to announce cuts this morning as the Cinderella ride has ended ,” he told clients in a note. But the tech industry has also reeled from criticism that the massive job cuts were the result of “bad planning.” “The layoffs are partially social contagion and are partially bad planning,” Melody Brue, an analyst with Moor Insights & Strategy, told The Examiner in an interview last week. “With all of the data that business leaders have, they have the tools to project their resource needs.” Google joins other tech giants and small companies in announcing major layoffs. Microsoft on Wednesday said it was slashing 10,000 workers. Amazon had announced that it was laying off about 18,000 jobs. In San Francisco, Salesforce announced after New Year's Day that it was cutting 8,000 positions. A few days later, crypto powerhouse Coinbase said it was eliminating about 1,000 positions. But Pichai also signaled that Alphabet was eyeing emerging opportunities in tech, especially with the surge in popularity of AI in the wake of the ChatGPT rollout. There’s been speculation that ChatGPT poses a serious threat to Alphabet. But Pichai said he was confident that the company’s “early investments in AI” will enable the company to be competitive. “Being constrained in some areas allows us to bet big on others,” he said. “Pivoting the company to be AI-first years ago led to groundbreaking advances across our businesses and the whole industry.” Place a free digital obituaryWe provide a free service for you to honor your loved ones. Click below to get started.
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