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Google to lay off 12,000 workers

By Sarah May
|
January 21, 2023

Amid escalating concerns that a recession is close on the horizon, tech behemoth Google announced on Friday plans to lay off 12,000 employees from its corporate ranks, as CNBC reports.

The news comes in the wake of similar announcements from a number of other big names in the technology industry, spurring speculation of serious volatility ahead.

CEO breaks bad news

Word of mass layoffs was delivered in a company-wide email from Sundar Pichai, CEO of Google itself as well as its parent company, Alphabet.

In the communication, Pichai revealed that separations with impacted employees in the United States would begin happening immediately, while cuts in other countries would be delayed somewhat as a result of “local laws and practices.”

The email indicated that American-based employees could expect 16 weeks of severance in addition to another two weeks' worth of pay for every additional year they have been with the company, 2022 bonuses and unused vacation time, as well as six months of healthcare coverage and job placement assistance.

In his statement to workers, Pichai said that the announcement “will mean saying goodbye to some incredibly talented people we worked hard to hire and have loved working with,” and for that, he was “deeply sorry.”

Referencing market changes that necessitated the layoffs, Pichai added, “As an almost 25-year-old company, we're bound to go through difficult economic cycles,” noting that “these are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities.”

Difficult landscape

As CNBC explained, even the biggest names in tech are struggling amid a host of current challenges, including interest rate increases and high inflation that prevailed in 2022 and now into 2023.

Shares in technology companies have sunk dramatically as a result and caused advertisers to rethink their online advertising budgets, leading to the need for dramatic workforce reductions such as Google's.

The difficulties faced by the tech industry stand in contrast to the otherwise relatively healthy labor market, and it appears that cuts in this particular sector are unlikely to stop anytime soon.

Google not alone

As ABC News reports, Google is by no means an outlier in term of the tech giants that have been compelled to shrink their ranks in recent months.

Back on Jan. 18, Microsoft announced that it would be laying off 10,000 workers, a number equal to approximately 5% of its worldwide headcount.

Company CEO Satya Nadella said in a statement to employees, “As we saw customers accelerate their digital spend during the pandemic, we're now seeing them optimize their digital spend to do more with less.”

Nadella added, “We're also seeing organizations in every industry and geography exercise caution as some parts of the world are in recession and other parts are anticipating one.”

Also joining the list of firms cutting significant chunks of their employee rosters is Amazon, which earlier this month declared its intention to slash 18,000 jobs in total.

CEO Andy Jassy explained that “This year's review has been more difficult given the uncertain economy and that we've hired rapidly over the last several years.”

Implications unclear

Though layoffs of the size recently announced by the aforementioned tech firms inevitably prompt speculation about whether a profound economic downturn is imminent, experts are cautioning that there could be a much simpler explanation afoot, as CNBC noted separately.

Some labor economists have posited that what is truly at play is merely the unavoidable unwinding of overzealous tech hiring that occurred during the COVID-19 pandemic – something they do not believe will spread to other sectors of the economy – but time will tell whether that is indeed an accurate take or simply wishful thinking.