“Mission: Downsize” has been the name of the game for the majority of the year, especially when the tech behemoths of the world are involved. As rising inflation and other macroeconomic conditions shape up to host the economic downturn for a longer period of time, Google’s parent company Alphabet turned out to be the latest to initiate mass layoffs, which may begin in early 2023.
According to a report from The Information, the tech giant is looking to lay off about 6% of its workforce, or about 10,000 employees, as it looks to cut down costs and register a faster growth rate amidst facing increasing pressure from multiple quarters. Alphabet had pocketed $13.9 billion in net profit in the third quarter of the year, which is a drop of 27% from a year earlier.
If the company follows through this decision, then it will make it the latest company – after Meta, Amazon, and Twitter – to lay off employees in the thousands and add to the over 137,000 white-collar professionals across 850 tech companies who have found themselves out of a job this year. Alphabet’s layoff report comes in just days after UK-based activist investor TCI Fund Management called on Alphabet to pursue aggressive cost cutting on the back of a hiring spree during the pandemic, claiming the business could be more efficiently run.
The Google-parent has a system in place to ease out the 10,000 employees and reduce its headcount. This system consists of a new ranging and performance improvement and management system, which will help managers identity and eliminate around 10,000 individuals for being underperforming employees.
The report added that with the help of this new ranking system, managers could avoid paying them bonuses and stock grants as well. It also reduces the percentage of employees that can score a high rating.
Alphabet currently has a workforce of around 187,000 employees, courtesy of its pandemic-induced growth and a prior surge in recruitments. This makes Alphabet one of the biggest employers in the tech industry, and one of the better paying ones.
According to a filing with the US Securities and Exchange Commission (SEC), the median annual salary of a Google employee is around $2,95,884. And since it is not immune to the adverse conditions that have plagued the global tech market this year, Google had announced earlier that it will be slowing down the hiring process in the fourth quarter of the year, before freezing recruitments completely, and CEO Sundar Pichai said that he aimed to make Alphabet 20% more efficient.
Christopher Hohn, a UK billionaire activist investor, described Alphabet’s headcount as an “excessive” one, claiming that the giant could be run efficiently if it had a lesser – but better compensated – number of professionals working in it. He also informed Alphabet that it paid its employees far more than other tech players did.