Author: Sam Gregory 

In recent times, many big tech companies are struggling with returns, and have turned to drastic steps like laying off employees as a solution.

As the technology sector suffers heavy economical infrastructure problems, Google recently announced that it will be joining the list by extending its hiring freeze and a possible layoff.

What is causing Google to take these measures? Let’s find out!

There Will Be Blood on The Streets? Oh! Google…

Google executives have reportedly warned employees to shape up, or face drastic outcomes if margins don’t start looking better for the tech giant.

As other tech companies begin laying off employees, Google has reviewed its quarterly earnings and told workers to boost productivity or prepare to lose their respective positions.

According to Insider, The Google Cloud Sales leadership informed its sales team of an impending “overall examination of sales productivity and productivity in general”. 

This could spell bad luck for Google employees.

Google isn’t the only tech giant looking to halt hiring or layoff its employees. 

Meta, Twitter, Intel, Microsoft, Uber, Linkedin, Oracle, and Spotify are among a growing number of companies to layoff employees amidst the current global economic slowdown.

Pichai was asked to speak about potential layoffs – a reply was delegated to Fiona Ciccioni, Google’s Chief people officer. Cicconi responded by saying the company didn’t have immediate plans to reduce its workforce but did not rule this out completely.

Why is Google Laying off Employees?

Alphabet, Google’s parent company, reported weaker-than-expected revenue and earnings for the April-June quarter (Q2). Revenue growth slumped to 13% from 62% in the same quarter last year.

Google CEO, Sundar Pichai, addressed this in late July, telling his employees that they have to improve their productivity and focus due to fierce economic headwinds affecting the technology sector.

According to Pichai: “it’s clear we’re facing a challenging macro environment with more uncertainty ahead”.

The Google CEO has stated that he wants to solicit ideas from the employees on how to achieve “better results faster”.

Furthermore, Google employees are already fearful of possible layoffs as earlier this month the company quietly extended its two-week hiring pause without making an announcement.

“Everyone has been talking about the company tightening its belt,” one employee stated. Another informed Insider that they are concerned about possible layoffs after Google hiring a freeze extension.

As a company, Google’s productivity isn’t keeping up with its headcount, the CEO told his employees in an all-hands meeting attended by more than 170,000 full-time employees.  

Pichai instructed the employees to “develop a culture that is more mission-driven, with an increase in focus on products and customers”. He also added that the company should think about minimizing distractions and raising productivity and product excellence.

What’s Causing Google’s Recurring Losses

Google Cloud – a big competitor to services provided by Microsoft and Amazon, has been facing losses since the second quarter of last year. 

Google’s Q2 2022 report reveals the company made over $2.5 billion in losses compared to the same quarter last year, falling from $18 billion to around $16 billion. 

These numbers pose a bigger problem for Cloud following the previous annual losses of $5.6billion in 2020 and $3.1billion in 2021.

Google has credited the dips to spending on data servers that were hard to tackle in previous quarters due to COVID-related issues. 

New servers have begun dominating the rising infrastructure spend and investors have been warned of oncoming high levels of “investments in technical infrastructure”.

When asked about Cloud margins, Google CFO Ruth Porat said this: “Our view remains that this is a long-term opportunity. 

It’s a trade-off between revenue growth and immediate opportunity. We (Cloud) continue to focus on the path to profitability and free cash flow positive to drive attractive returns”.

Google also mentioned that spending on office facilities will rise, while a hiring freeze would be enacted.

Pichai said Alphabet would continue hiring “top engineering and technical talent”. He further stated that the company will invest in the tools to make its employees more productive.

A Final Word

Like most big tech companies, Google is taking desperate measures to cope with the current economic downturns. However, it looks like the only solution in sight is cutting off the extra bulk.

Zuckerberg has already made it clear that Meta is more than willing to part ways with employees who perform below par”. 

Also, Twitter CEO Parag Agrawal informed employees of the hiring pause earlier this year, mentioning a lag in revenue and growth targets.

CEOs around the world are blaming the current economic situation as the cause of the series of cost-cutting measures implemented. Meta’s CEO Mark Zuckerberg has labeled it as “one of the worst downturns in recent history”.