Alphabet, the parent company of Google, said Friday that it plans to cut 12,000 jobs, becoming the latest technology company to reduce its workforce after a hiring spree during the pandemic and amid concerns about a broader economic slowdown.
The job cuts are the company’s largest ever, amounting to about 6 percent of the company’s global workforce. Sundar Pichai, Alphabet’s chief executive, said the company expanded too rapidly during the pandemic, when demand for digital services boomed, and now must refocus on products and technology core to the company’s future, such as artificial intelligence.
“We hired for a different economic reality than the one we face today,” Pichai said in a note to employees posted on the company’s website.
Google joins a list of other technology companies that have laid off workers after concluding they had overextended under the belief that the pandemic-fueled boom represented a new normal. Amazon, Meta, Microsoft, Salesforce and Twitter are among others who have announced thousands of job cuts.
More than 190,000 jobs have been cut by technology firms since the start of 2022, according to Layoffs.fyi, a website that tracks job cuts in the industry.
The moves mark the end of a period in which the technology industry experienced uninterrupted growth, expanded rapidly and battled for employees with lavish perks and high pay. Google, started in 1998, helped define a Silicon Valley work culture that influenced corporations far beyond the technology sector.
Alphabet had nearly 187,000 employees as of the end of September 2022, compared with about 150,000 a year earlier.
In a note titled “A difficult decision to set us up for the future,” Pichai said the job cuts would run across product areas, job responsibilities and geographies. It comes at a time when Google is facing competition from rivals offering new ways to search for information on the internet. ChatGPT, created by a company called OpenAI, has dazzled users by providing clearly written answers to questions and queries.
“These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities,” Pichai said. “Being constrained in some areas allows us to bet big on others.”
Even as Alphabet and other tech giants trim their workforces and pledge to become more efficient, they remain massively profitable. In 2021, Alphabet had profit of $76 billion and revenue of nearly $258 billion.
But the technology sector has not been immune from rising interest rates and a slumping global economy. As the advertising industry struggles and companies purchase fewer ads on Google’s search engine or YouTube, Alphabet’s bottom line took a hit. The company’s cloud computing business has continued to trail Amazon and Microsoft. In October, Alphabet said quarterly net profit had fallen 27 percent.
The company reports its financial results for 2022 on Feb. 2.
Many employees at Google had been bracing for cuts as their peers at other large tech firms announced job losses. The closure of some small offices, and the release of a new employee evaluation system that was seen as a way to identify underperforming employees to cut, signaled to many workers that the company was preparing for layoffs.
Alphabet said that US employees would receive a severance package that includes 16 weeks of salary, plus two weeks of extra pay for every year they worked at Google. Laid-off workers will receive six months of paid health care. Compensation for workers outside the United States will be determined by local labor laws, the company said.
After the job cuts were announced early Friday, Alphabet’s stock price rose more than 3 percent in premarket trading.