Google became the latest tech company to cut thousands of jobs after two years of hiring spree

Google’s parent company Alphabet became the latest tech giant to announce layoffs.

Approximately 12,000 roles, or 6% of its global workforce, are facing the chop, according to a staff memo CEO Sundar Pichai sent out today (Jan. 20). Those US employees who were affected have already been informed of the cuts, but the process for international staff will take longer, owing to local laws and practices.

“As an almost 25-year-old company, we’re bound to go through difficult economic cycles,” Pichai wrote. “These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities.”

While there’s no good time to announce layoffs, Google picked an especially peculiar time—2am in California—to send out the memo and make the announcements. Pichai acknowledged that the cuts, which are happening across Alphabet product areas, functions, levels and regions, are jarring. The company allowed everyone to work from home today, and said it’ll host a town hall on Monday (Jan. 23).

Terms and conditions of Google layoffs

Alphabet has announced a number of measures to soften the layoff blow.

🤑 Workers will receive salary during the full notification period, which is a minimum 60 days

💰 The severance packages start at 16 weeks salary plus two weeks for every additional year at Google, and accelerate at least 16 weeks of GSU (Google Stock Unit) vesting.

💸 The company will pay 2022 bonuses

🏖 Employees will get remaining vacation time

🙌 Google is offering 6 months of healthcare, job placement services, and immigration support for those affected.

The trend of overhiring and firing in big tech

Pichai acknowledged the reason for the job cuts was correcting for the hiring surge of the past few 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,” he wrote.

Fellow tech giants Twitter and Meta both cut thousands of jobs in 2022, and already in 2023, Amazon, Salesforceand Microsoft have slashed as many roles. And most of them cited the same reason as Alphabet for their respective purges, too.

Charted: Google’s ballooning workforce

The Google cuts were a long time coming

In November 2022, activist investor TCI Fund Management penned a letter encouraging CEO Sundar Pichai to take “aggressive action” to trim headcount and salary expenses. TCI said headcount has “increased at an annual rate of 20% since 2017,” which it labeled “excessive.”

A couple of days later, a November report by the Informationwhich said the search giant was looking to reduce its headcount by 10,000, also suggested how it was going to do it—by looking at performance targets. To assess who ranks at the bottom of the pile, last May, the company introduced a new performance management system designed to help managers “push out thousands of underperforming employees” starting in early 2023.

Some decisions were less about individuals, and more about overall projects and experiments. For instance, Google slashed funding and scrapped half the projects for its incubator Area 120 last year. So it comes as little surprise that it’s firing members of that team—even if some have been with the company for a decade.

The company has also apparently resorted to several other cost-cutting measures including instituting travel bans, cutting vendors, and avoiding backfilling roles. It’s also pushing the timeline to award bonuses back a few months.

Google didn’t explicitly disclose how it’s picking who stays and who goes.

Quotable: Some Google employees feel blindsided

“I was expecting a glowing performance review and had just started to lead a critical project in my org. This came as a total and nasty surprise…My understanding was that I was a strong performer. I had been promoted to Senior about a year ago and my conversations with my manager were leading me to expect a strong performance review, somewhere near the ‘Outstanding’ (4/5) category.” —Tweets by Chris McDonalda senior software engineer on the Chrome operating system build team, tweeted. According to his LinkedIn, McDonald has been with the company for four years and 6 months.

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🏦 A third of job cuts at Goldman Sachs are due to affect its banking and trading units