In a blow to its workforce, Alphabet, Google‘s parent company, is set to cut 12,000 jobs globally. This marks another major reduction in staff in the tech industry, following Microsoft’s announcement of 10,000 job cuts and Amazon’s 18,000 job cuts. The cuts, which will impact 6% of Alphabet’s workforce, will be felt in recruitment and engineering departments, among others.
Alphabet CEO, Sundar Pichai, took full responsibility for the cuts in an internal email and thanked employees for their hard work, saying their contributions have been “invaluable.” He also mentioned that while the transition wouldn’t be easy, employees would be supported as they look for their next opportunity. He reassured them of the severance packages, including at least 16 weeks of salary, their 2022 bonus, paid vacations, and six months of health coverage for US employees.
Pichai remained optimistic about Alphabet’s ability to achieve its mission despite the tough times and acknowledged the difficult news. The news was welcomed on Wall Street, with Alphabet shares rising by 3.5% in electronic trading before the stock market opened.
The tech giant’s cuts reflect a trend of overspending in the tech sector, where companies hired at a pace that was deemed unsustainable, according to Daniel Ives of Wedbush Securities. This trend is now being reversed due to a slowdown in the industry and the impact of rising interest rates and inflation.
Nearly 194,000 employees in the tech industry have lost their jobs in the US since the start of 2022, not including the recent cuts announced by Alphabet. Major tech companies like Hewlett Packard and Salesforce have also announced significant cuts this month.
In addition to the internal challenges, US tech giants have also been facing scrutiny from the European Union, which has started enforcing regulations to curb tax avoidance, stifle competition, prevent profiting from news content without paying, and serve as platforms for disinformation and hate.
The situation highlights the need for companies to be more responsible in their spending, especially in the face of a slowdown in the industry and increased regulatory pressure. It also serves as a warning to the wider economy, as the trend of mass layoffs in the tech sector may spread to other industries.