Tech giants Google and Microsoft are the latest addition to a long list of tech companies including Amazon, Salesforce and others that have laid off employees this year. Google will terminate 12,000 roles and Microsoft will reduce its headcount by 10,000. The move comes amid growing concerns over economic uncertainty, slowing demands and recessionary fears.
Google’s parent company Alphabet last week said it plans to lay off 12,000 staff across the regions, which make up around 6% of its global workforce. The job cut is across Alphabet, product areas, functions, levels and regions.
“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,” Google and Alphabet CEO Sundar Pichai said in the email sent to Google employees Friday.
While taking full responsibility for reducing the workforce, Pichai pointed to today’s economic reality which is unmatched by the growth and hiring in past years. “Over the past two years, we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today,” Pichai wrote in the email.
In 2021, Alphabet’s total number of employees was 156,500, a 15.67% increase from 2020 and further reached 187,000 in the third quarter of 2022, as per Macrotrends’ report.
Besides, the economic uncertainty and slow growth, Google’s decision to cut jobs was pushed by its investors. A London-based Google investor TCI Fund Management, with a stake valued around $6 billion had reportedly flagged its concerns last year over the tech giant’s big workforce and operational costs.
More so, after the San Francisco-based research company OpenAI released its Conversational AI chatbot ChatGPT in November 2022. Several media reports suggested that Google has been forced to rethink its AI strategy and search model fearing it could lose its dominance in the online search and ads business.
Like Google, Microsoft will also reduce its workforce by 10, 000 employees by March this year. Microsoft’s workforce increased by 22.1% in 2022 reaching a total of 221,000 employees, as per Macrotrends’ report.
In a note shared with Microsoft employees, CEO Satya Nadella pointed to three trends that led to job cuts in the company. That includes a fall in digital spending by customers now, the cautious approach across industries due to the recession and a new computing platform led by advances in AI.
“This is the context in which we as a company must strive to deliver results on an ongoing basis, while investing in our long-term opportunity. I’m confident that Microsoft will emerge from this stronger and more competitive, but it requires us to take actions grounded in three priorities,” Nadella said in the note.
With the plan to lay off 10,000 employees, the company aims to realign its cost structure with revenue given customer demand. Nadella said,” We will also continue to invest in strategic areas for the future to drive secular growth and long-term competitiveness for the company while divesting in other areas.”
Like Microsoft, Salesforce has announced plans to lay off over 7,000 employees making it a total 10% reduction in the company’s workforce of over 79,000 workers as of December 2022.
Salesforce’s co-CEO Marc Benioff in his letter to employees early in January pointed to a measured approach by customers in their purchasing decisions due to the challenging macroeconomic environment caused lay off workers.
Between Google and Microsoft a combined total of 22,000 employees are being moved out of their jobs and roles in the next few months. Amazon will cut over 18,000 jobs due to the uncertain economy.
Mind well, these are some of the global tech companies with huge revenues and sound financials, which allows them to offer severance pay and other benefits to their terminated workers. However, there are small and mid-size tech companies and startups laying off workers too.
Probably, they may not be in a position to compensate their workers with good severance pay and benefits leaving them in an extremely tough situation with jobs.
According to Layoffs.fyi‘s latest data, more than 1,600 employees are being laid off each day in 2023 by tech companies across the globe including in India. In the first 15 days of January, Layoffs.fyi’s data revealed that 91 companies have laid over 24,000 IT employees.
Around 91 companies have laid off more than 24,000 tech employees in the first 15 days this month, signalling worse days ahead. In 2022, over 1,000 companies laid off more than 1.5 lakh employees, as per the data from Layoffs.fyi .