NEWS

Microsoft Lay off 10,000 Staff & Alphabet 12,000 to Slash Costs

Alphabet Inc The company that owns Google has said it will cut about 12,000 jobs because “the economy has changed.” 

The company also stated that it would be doubling down on artificial intelligence (AI) and terminating employees who support experimental projects.

It follows thousands of layoffs at tech giants, including Amazon.com Inc, Microsoft Corp., and Meta Platforms Inc, who are downsizing after a pandemic-led hiring spree left them flabby in a weak economy. 

The job cuts affect 6% of its workforce, and they come after Amazon.com Inc (AMZN.O), Microsoft Corp (MSFT.O), and Meta Platforms Inc (META.O)

Alphabet Inc., headquartered in Mountain View, California, saw a 4% rise in its share price on Friday after announcing plans to increase the size of its employees by about a third between 2020 and 2021. 

They had dropped by 30% over the past year, the same as the overall drop in the technology sector (.IXIC), which was 24%.

Alphabet’s Layoff:

In the statement that was sent out on Friday, Alphabet’s CEO since 2019, Sundar Pichai, said that he assumed “full responsibility” for the actions that led to the layoffs that were carried out.

  • Pichai, whose compensation was recently adjusted to be more closely tied to performance, stated that this was an opportunity to “sharpen our focus, re-engineer our cost base, and direct our talent and capital to our highest priorities.” 
  • This statement was made as Alphabet looked to imbue its products with more artificial intelligence. Pichai’s statement echoed comments made by Microsoft on Wednesday when the company announced that it would be cutting jobs.
  • Alphabet, which has long been the industry leader in artificial intelligence, is now facing competition from Microsoft, which is planning to increase its investment in ChatGPT, a good chatbot that responds to questions with replies that seem like a person made them.

Alphabet’s primary source of income, advertising revenues, is coming under increased pressure due to companies cutting their expenditures in response to reduced spending by consumers.

  • It is obvious that Alphabet is not exempt from the difficult economic background, says Susannah Streeter, an analyst at Hargreaves Lansdown. 
  • There are mounting concerns about the possibility of a recession in the United States.
  • “The rate of advertising growth has leveled down… “Competition is also heating up, with Alphabet facing a powerful rival in TikTok, and Instagram also vying for its important YouTube viewers,” said Streeter, pointing out that Alphabet has also racked up billions in regulatory fines. 
  • A well-known app called TikTok lets users make quick videos and share them with their friends.

Analyst Mark Mahaney from Evercore ISIS said that the record-high headcount at Alphabet has presented a substantial margin risk moving into fiscal 2023. 

Analyst Mark Shmulik from Bernstein stated that the job reduction might save the business between $2.5 billion and $3 billion in expenses.

Image courtesy of nypost

Read: CNN aims to cut $100 Million in Expenses Starts Layoffs

Big Job Cuts

In the most recent few months, layoffs at four of the largest technology businesses in the United States have combined to eliminate 51,000 employees. 

They have done this even though the labor market in the United States is in a healthy state.

  • The tech sector is somewhat like the proverbial canary in the coal mine, according to Stuart Cole, an economist at Equiti Capital, who thinks that the layoffs in that industry signal that the outlook for job security is finally starting to turn less positive. 
  • As the saying goes, “The canary in the coal mine,” so goes the technology sector.
  • Apple (AAPL.O), recruited more cautiously during the epidemic, has refrained from reducing staff. 
  • However, on Friday, the website AppleInsider said that the iPhone manufacturer has begun to lay off non-seasonal staff in its retail channel, which includes locations such as Best Buy (BBY.N) shops. 
  • The sources cited in the article were anonymous.
  • The representatives from Apple were not immediately reachable for a comment on the story.

The Chief Executive Officer of Google, Sundar Pichai, said on Friday that the business intends to reduce its workforce by 12,000. Google is the latest technology corporation to reduce its workforce after fast growth during the epidemic.

Alphabet robotics subsidiary Intrinsic lays off 20% staff | Computerworld
Image courtesy of Computerworld

To give you the broader picture:

At the end of 2017, layoffs in the IT sector began to skyrocket, becoming the new normal for an industry that is gradually losing its attractiveness.

The forces behind the news:

Pichai said in a message published on Google’s site on Friday that an email had already been sent to workers in the United States whom the layoffs will impact. 

According to what he had said, the procedure for overseas workers “would take longer” because of the local rules and procedures.

  • On the Google blog, Pichai said that the company has had “periods of tremendous growth” over the previous two years. 
  • “We recruited for a different economic reality than the one we confront now to meet and drive that development,” the author writes.
  • After conducting a review “across product areas and departments to ensure that our people and positions are aligned with our greatest goals as a business,” he said that Google has plans to reduce the number of jobs available in the organization.

Details:

According to Pichai, Google will pay workers during their entire notice period, which will be at least sixty days, as well as provide them with a severance package that will start at sixteen weeks of pay and increase by two weeks for each additional year of employment. 

Pichai also stated that the severance package would be paid in one lump sum.

Remove the zoom:

Google is the most recent large corporation to announce significant job eliminations.  Microsoft said earlier this week that it intends to terminate the employment of over 10,000 employees. 

Early in January, Amazon announced that it would eliminate 18,000 positions, while Salesforce said it expects to eliminate 10% of its workforce.

  • According to what Christine Clarridge writes for Axios Seattle, more layoffs are anticipated this year, given the fast growth many tech businesses undertook during the epidemic. 
  • These high-tech positions, which were formerly thought to be impervious to the state of the economy as a whole, have become less appealing as a result of the danger of layoffs and instability.
Image courtesy of hollywoodreporter

Read: General Motors Outsells Toyota in the US

Microsoft Technology Company to Eliminate Employees:

Microsoft Corporation (MSFT.O) said on Wednesday that it would remove 10,000 positions and take charge of profits of $1.2 billion as its cloud-computing clients reevaluate their spending and the business prepares for the possibility of a recession.

The layoffs come on top of the tens of thousands of job losses reported in recent months across the technology sector, which has entered a period of slower growth after going through a phase of rapid expansion during the epidemic.

The announcement comes at the same time that the software developer plans to increase its investment in generative artificial intelligence, which is widely seen as the sector’s next major opportunity.

  • The company’s Chief Executive Officer, Satya Nadella, recently sent out a memo to staff in which he sought to address the disparate outlooks for various aspects of the business.
  • He stated that customers want to “optimize their digital expenditure to accomplish more with less” and “exercise prudence since certain parts of the globe are in a recession, and other parts are expecting one.”
  • The next big wave of computers is being born simultaneously with advancements in artificial intelligence. 
  • According to Nadella, the layoffs, which are expected to affect fewer than 5% of Microsoft’s staff, are expected to be completed by the end of March, and notifications are scheduled to begin on Wednesday.
  • However, he said that Microsoft will continue adding employees in “strategic areas.” Artificial intelligence will be one of those sectors. 

This past week, Nadella promoted artificial intelligence (AI) at a global leadership gathering held in Davos, Switzerland. 

He said the technology would revolutionize Microsoft’s products and affect people worldwide.

  • Microsoft has considered increasing its current one billion dollar investment in OpenAI, the business that developed the Silicon Valley chatbot phenomenon known as ChatGPT, which Microsoft hopes to soon offer through its cloud service. 
  • OpenAI is a company that Elon Musk founded.

Wednesday was a bad day for investors in the Redmond, Washington-based corporation, as its stock finished down 2%.

  • The statement comes at the same time as the beginning of layoffs at major competitor Amazon.com Inc. (AMZN.O), which began informing staff on Wednesday of its 18,000-person job reduction. 
  • Amazon competes with Amazon.com in the retail and cloud-computing markets.
  • They said in an internal message that impacted employees in the United States, Canada, and Costa Rica will be notified by the end of the business day. 
Image courtesy of timesnow

Read: Amazon’s Wild Layoffs Just Started

Corporation Named Meta Platforms

The parent company of Facebook, Meta Platforms Inc (META.O), has revealed that it would eliminate 11,000 positions, while the cloud-based software giant Salesforce Inc (CRM.N) has declared that it will eliminate 10% of its staff of 80,000 employees.

  • According to the outplacement company Challenger, Gray & Christmas, the total number of job cutbacks disclosed in the technology industry in 2022 was more than 97,000, making it the largest year for the sector since 2002, when 131,000 job cuts were revealed.
  • The senior vice president of the corporation, Andrew Challenger, said that the company had yet to see this level of activity since the dot-com bubble burst.
  • According to the most recent information on the Worker Adjustment and Retraining Notification (WARN) website for the state of Washington, Microsoft will be laying off 878 full-time employees at its Redmond headquarters. 
  • Most firms in the United States are obliged by law to disclose staff reductions that affect 50 or more employees at a single location.
Meta Has Plans For Massive Layoffs This Week Due To Weak Q4 Forecast: WSJ  Report
Image courtesy of MustShareNews

Cloud Growth Declining:

Some experts believe that the impact of Microsoft’s one billion dollar charge might be seen outside the technology industry and will harm the company’s earnings per share during the second fiscal quarter of this year.

  • “Here’s one of the marquee growth companies with a very distinct user base saying that perhaps economic conditions aren’t nearly as good as we thought they were,” said Brian Frank, a portfolio manager at Frank Funds who has owned Microsoft stock on and off over the past several years. 
  • Here’s one of the leading growth companies with a recognizable user base warning that perhaps things aren’t quite as good as we thought for the economy.
  • According to Nadella, the charge was caused by severance expenses, revisions to Microsoft’s hardware range, and lease consolidation to establish higher-density workplaces.
  • Microsoft did not provide any information on the hardware changes or comment on whether or not it will cease the development of any product line.

In recent years, Microsoft has seen a meteoric rise in its cloud income as a direct result of increased demand from businesses to hold data online and handle computation in the so-called cloud. 

But growth was only 35% in the first fiscal quarter of 2023, and the business anticipates further deceleration in the coming quarters. 

In July of the previous year, it was reported that a few jobs had been removed entirely.

The approximate number of individuals whose employment was terminated or will be terminated, as stated by a selection of businesses.

Image courtesy of TechCrunch

Read: Top 25 US Jobs with the Fastest Growth in 2023

Some Relaxation:

According to sources familiar with the situation, Alphabet has been working on a significant AI launch for quite some time. 

According to one of the reports, the event will occur during springtime. 

  • It was also claimed by the New York Times that Google intended to launch more than 20 new products along with a search engine that had chatbot capabilities.
  • According to Pichai, individuals who work as recruiters, corporate personnel, and those employed on engineering and product teams would be among those who lose their employment. 
  • A Google spokeswoman confirmed that most employees at Area 120, the company’s in-house incubator for new initiatives, had been let go.
  • In a statement, the Alphabet Workers Union referred to the company’s leadership accepting “full responsibility” as “little consolation.”

The union’s statement was that “it’s awful that our jobs are first on the chopping block so stockholders may see a few more points on a chart next quarter.”

In the United States, where Alphabet has already contacted concerned workers, the company will provide

  • severance pay,
  • six months of healthcare, and
  • assistance with immigration for those employees who are let go.

According to what Pichai noted in the message, the notice process for layoffs would take more time in international locations owing to local employment rules and norms. 

In February, employees in Asia will discover whether or not they will be affected by the decrease in their workforce.

 

close

WHAT'S UP AND COMING ?

STAY INFORMED

We don’t spam! Only Important Stuff.

Write A Comment