Google may lay off thousands of employees to reduce costs.
Alphabet, Google’s parent company, seemed immune to layoffs in the tech industry. However, according to the Guardian, a hedge fund owned by Christopher Hohn said that workers at Alphabet are paid too much. It could benefit from cutting back its workforce.
Hohn’s company TCI is based in London and a significant investor in Alphabet since 2017. Hohn encouraged Google’s CEO to follow the cost-cutting measures of its tech rivals like Meta, Amazon, and Microsoft. For him, the cost per employee is “too high.”
But Alphabet has to find a reason to lay off its employees. Thus, the company launched a ranking system as reported by Forbes.
If the employees are rated as poor performers, they would be let go. The company could utilize the ratings to avoid paying stock grants and bonuses.
With the new system, 6% of the employees could get a bad rating. Based on the headcount numbers, it would count for approximately 11,000 employees.
Lay-Offs in the Tech Industry
After its rivals laid off thousands of employees, Google workers are anxious that Alphabet might be the next to terminate thousands of its staff members.
Although Alphabet has avoided widespread layoffs, some of the workers are apprehensive that the company would use performance-based ratings to lower its headcount to cut costs significantly.
Employees have been told to support check-in sessions. Managers need to have check-ins before assigning the lowest ratings to staff.
The layoffs in the tech industry started earlier this year. Smaller companies sacked their employees to control their ongoing spending. And this trend extended to the behemoths of the industry.
The primary round of layoffs is the result of the pandemic hiring frenzy.
During the pandemic, the company hired thousands of employees to meet online services. As the infection rates went down, users are now going back to their pre-pandemic behavior. As result, growth rates are seeing a downward trend.
When the infection was still high, many tech companies thought that online activities would be the new normal. Office workers started to work from home. Because they believed this shift would be permanent, tech companies hired aggressively. At first, their profit grew.
However, as the world has pretty much returned to normal, it is clear that the vision of Mark Zuckerberg and other tech leaders wasn’t accurate.
Although many people are still working from home, hybrid work is more popular post-covid reality. Many employers want their workers to have some time in the office to share ideas.
Zoom and Google Meet are still being used these days. But gone are the days when we had to hold every meeting online.
Tech companies did hire too many people. These people are experienced software engineers earning low to six-figure incomes. They enjoyed generous benefits and stock options. But it has gone too far for many companies.
There’s also the fear of recession. It means that consumers would spend less. Tech firms would also lower their ad spending. Since Alphabet is an ad business, it has felt an imbalance.