Google’s parent company, Alphabet, has announced that it will be cutting around 12,000 jobs, which is approximately 6% of its workforce. The cuts will be made across product areas and regions, according to an email from CEO Sundar Pichai, which was posted on the company’s website on Friday. US employees who are affected by the layoffs will be kept on the company’s payroll for 60 days and will receive a minimum of 16 weeks’ salary as severance pay, along with other benefits.
Over the last two years, Alphabet’s workforce expanded by over 50,000 employees as its services experienced high demand during the pandemic, leading to increased profits. However, in recent months, the company’s main source of revenue, digital advertising, has slowed as a result of the economic downturn and concerns of a recession, causing advertisers to decrease their spending.
Alphabet is scheduled to release its earnings for Q4 of December 30 in early February. According to Wall Street analysts, the company’s revenue is expected to increase by only 1.7% compared to the same period in the previous year. This would be a significant decrease from the 32% growth seen during the same period last year.
Additionally, analysts predict that net income will decrease by almost 25% year-over-year. These job cuts come in the wake of a series of layoffs in the tech industry, as inflation affects consumer spending and rising interest rates decrease funding. Additionally, the demand for digital services has decreased as people return to in-person activities.
On Wednesday, Microsoft announced plans to lay off 10,000 employees. This follows similar announcements by other major tech companies, such as Amazon’s plan to lay off 18,000 employees, Salesforce’s decision to cut 10% of its staff, and Meta (parent company of Facebook) announcing 11,000 job cuts. However, Apple has not announced any significant layoffs recently. Additionally, home goods retailer Wayfair announced on Friday that it would be cutting approximately 1,750 employees, marking their second round of layoffs within the last six months.
Leaders of major tech companies, such as Mark Zuckerberg of Meta and Marc Benioff of Salesforce, have acknowledged their responsibility for over-hiring during the early stages of the pandemic, as they misjudged how demand for their products would decrease as Covid-19 restrictions were lifted. On Friday, Sundar Pichai, CEO of Alphabet, also took responsibility for the recent job cuts.
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