Faced with a gloomy economic outlook, Google is preparing to cut 12,000 of its 187,000 jobs. The company would thus sign the largest job cut in its history.
The announcements of job cuts in technology companies never stop raining. According to the specialized site Layoffs.fyi, nearly 194,000 workers in the sector have lost their jobs in the United States since the start of 2022. Google
adds to the list by going much further than the mere hiring freeze announced last summer. According to an internal message, the Alphabet subsidiary plans, in fact, a reduction of 12,000 jobs, or 6% of its workforce.
The action Alphabet gained following this announcement up to 1.8% during pre-market exchanges in New York. Last year, it lost about 30% of its value.
“I am responsible”
Sundar Pichai, CEO of Google, says he takes “full responsibility decisions that brought the company here.” “This is an important time to refocus our attention, reorganize our cost base, and direct our talent and capital to our priorities.” Observers, however, point out pressure which Google was subject to of investors in order to adopt a more aggressive and less wasteful strategy.
These reductions will affect all units and all markets of the organization. In Belgium, 400 people work in the data center and 120 in administration. For the time being, Michiel Sallaets, communication manager, says he cannot say what the impact on employment will be.
The American employees licensees will receive compensation for at least 16 weeks and six months of health benefits. In other countries, compensation will vary according to local laws and practices. Sundar Pichai specifies that the granting of bonuses will not be affected.
In addition to the drop in advertising revenue, Google is also suffering from its delay in the development of the cloud dominated by Amazon or Microsoft.
The end of abundance
For Google, Facebook and Twitter, it points to the addiction to online advertisingwhich, after being doped during the containment due to the pandemic, has reduced its sails.
However, Google had resisted better thanks to its search activity, but in addition to the drop in advertising revenue, it also suffered from its delay in the development of the Cloud dominated by Amazon or Microsoft.
“The balance sheet is therefore not completely finished, but with the Gafa, the biggest impact should be behind us.”
For Microsoft, Apple and Amazon, he underlines the recruitment with a vengeance carried out in recent years to respond to the forced digital acceleration of companies in times of health crisis. “To meet annual growth of 10 to 15%, Microsoft needed more staff. However, with the end of confinement, we have seen the enthusiasm for digital transformation wane with, in particular, the return to the office of teleworkers. to this is added the energy crisis. lower single-digit growth as the company continued to recruit. To maintain its profit margins, it has to put the brakes on.”
More announcements to come?
With the announcement of the day, all of the Gafa seem to have taken stock of their situation. Nevertheless, Nicolas Van Zeebroeck does not rule out see other less visible tech players follow suit. He also wants to be attentive to the gaming sector. “The balance sheet is therefore not completely finished, but with the Gafa, the biggest impact should be behind us.”
Then there remains the Meta case. The group remains vulnerable because of its dependence on the operating system of Google and Apple. And then there is the metaverse and the colossal investments which were operated without any view on a possible maturity of profitability.
“European industry is a supplier of the American technological industry. A delay effect is therefore not excluded (…).”
Are American actors suffering more than their Chinese or European counterparts? Admittedly, the Gafa have few global equivalents. There are the Chinese Alibaba & co, but the transparency of their state of health is relative and their integration into conglomerates makes the analysis more complicated.
And in Europe? “We have more in Europe niche players, who are in a different situation. We also have companies trying to compete with the big American players, like Odoo against SAP, Oracle or Microsoft. They haven’t grown to the same extent and are less dependent on the market.”
Nevertheless, Nicolas Van Zeebroeck does not rule out a snowball effect in the situation of American tech longer term. “European industry is a supplier of the American technology industry. A delayed effect is therefore not excluded, even if I do not anticipate it to the same extent.”