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Tech workforce cuts accelerate with Alphabet layoff

Citing economic concerns, Google's parent company, Alphabet, is laying off 12,000 employees. That puts the total number of tech layoffs in 2023 at more than 30,000.

Google parent Alphabet Inc.'s layoff of 12,000 workers increases the total number of tech layoffs in January alone to more than 30,000. That includes Microsoft's reduction of 10,000 earlier this week.

Sundar Pichai, CEO of Google and Alphabet, said the company -- known for its search engine, online advertising and cloud businesses -- is responding to changing economic conditions.

"Over the past two years, we've seen periods of dramatic growth," Pichai wrote in a blog post published Friday morning. "To match and fuel that growth, we hired for a different economic reality than the one we face today."

Pichai said positions eliminated reflect the outcome of a "rigorous review" and cut across Alphabet's "product areas, functions, levels and regions."

Pichai's message, similar to Microsoft's, noted that businesses worldwide are exercising caution.

Tech layoffs in January now total 31,150 -- a headcount that roughly equals one-third of all the layoffs in 2022, according to data compiled by Challenger, Gray & Christmas, Inc., an outplacement firm in Chicago. It also found that most of last year's tech layoffs occurred in the fourth quarter.

Despite the job cuts, tech companies are holding on to their technical talent, said Victor Janulaitis, CEO of Janco Associates, a labor market research firm in Park City, Utah.

"A majority of the workers laid off were administrative staff like accounting HR, and non-technical personnel," Janulaitis said of the wave of recent tech industry cutbacks. "Developers, for the most part, were exempt."

Tech hiring, at least through December, was still outpacing tech layoffs.

Too many employees

In November, Alphabet was urged by an investor group to reduce its payroll.

"The company has too many employees and the cost per employee is too high," wrote Christopher Hohn, managing director of TCI Fund Management Ltd., which said it owned Alphabet shares then worth $6 billion.

A majority of the workers laid off were administrative staff like accounting, HR, and non-technical personnel.
Victor JanulaitisCEO at Janco Associates

In his open letter to Pichai, Hohn said Alphabet's head count had more than doubled since 2017. "This growth is excessive," he said.

The TCI letter said Alphabet's headcount was nearly 187,000 in the third quarter of 2022. An internal Google memo put the staff reduction at about 6% of its global workforce, according to Reuters. Asked about its present headcount, an Alphabet spokesperson said the company isn't commenting beyond what's in Pichai's blog post.

Amazon recently cut 18,000 employees, and Salesforce announced a 10% reduction this month. In October, Google reported its third-quarter revenues at just over $69 billion, a 6% increase, but it missed analyst expectations.

Patrick Thibodeau covers HCM and ERP technologies for TechTarget Editorial. He's worked for more than two decades as an enterprise IT reporter.

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