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What just happened? Another company has joined the long list of tech giants laying off swathes of employees. Google parent Alphabet said it is cutting 12,000 jobs worldwide, which is around 6% of its global workforce. The news comes just days after Microsoft confirmed it was eliminating 10,000 positions.
Alphabet Chief Executive Officer Sundar Pichai told staff that the cuts, which will impact jobs across all divisions of the organization, come after a rigorous review of the business. The CEO said he takes "full responsibility for the decisions that led us here."
Severance packages for US employees include at least 16 weeks of salary, their 2022 bonus, paid vacations, and six months of health coverage. Pichai thanked staff for "working so hard" and their "invaluable" contributions.
Alphabet shares over the last month. Today's uptick came after the layoff announcement
"While this transition won't be easy, we're going to support employees as they look for their next opportunity," Pichai said. "Until then, please take good care of yourselves as you absorb this difficult news. As part of that, if you are just starting your work day, please feel free to work from home today."
Working in tech is a risky profession right now. Many companies massively increased their headcounts during the pandemic to cope with the increased demand for their services at a time when many people were stuck indoors. Most firms thought they could sustain this level of growth, but 2022 proved to be a terrible year for the economy as inflation and interest rates skyrocketed and consumers reined in their spending.
In addition to Microsoft's and now Alphabet's layoffs, Amazon has recently confirmed it will let go of a record 18,000 people, which it blames on the uncertain economy and the company's rapid hiring throughout the pandemic.
The tech industry saw more layoffs in the first week of January than across the whole of December. According to consulting firm Challenger, Gray & Christmas Inc (via Bloomberg), nearly 97,171 tech employees lost their jobs in the US since the beginning of 2022, up 649% compared to the previous year, and that's not including those just announced by Alphabet.
Alphabet's third-quarter profits declined 27% YoY to $13.9 billion, leading to a reduction in its hiring and investors calling for more aggressive spending cuts. Alphabet Shares were up 1.8% in premarket trading following the announcement of the layoffs.