Alphabet seeks to ax 10,000 underperforming Googlers

Even Google is not immune from the severe recession in the technology sector. While more than 135,000 white-collar tech and startup professionals have been downsized since the beginning of the year, the search engine giant has avoided the trend.

However, due to pressure from an activist hedge fund, adverse market conditions and the need to cut costs, Google plans to offload 10,000 employees through some sort of stack ranking and performance improvement plan. If employees are classified as underperforming, they will be kicked out. Also, the new performance system could use ratings to avoid paying bonuses and stock grants.

Google managers were asked to classify 6% of employees, representing 10,000 people, as underperformers, compared to the traditional 2%, according to the Information. In a previous announcement, supervisors were told to reduce inflated ratings.

Hedge fund billionaire tells Google to make cuts

Christopher Hohn, a billionaire activist investor from the UK, wrote a letter to Alphabet, the parent company of Google, saying its employees are overpaid compared to other tech giants and its bloated workforce needs to be scaled back.

The average compensation for an Alphabet employee last year was about $295,884, according to a Securities and Exchange Commission filing, Hohn said in his letter. The pay was almost 70% more than what Microsoft paid its employees. Compared to the 20 largest US tech companies, Alphabet paid its employees 153% more than competitors offered their employees.

Hohn ignores the counterintuitive reason why Google and other tech companies pay software engineers $300,000 to $800,000 in total compensation packages. They’re hoarding talent from their rivals and paying workers handsomely, so there’s no motivation to quit and build a startup that will disrupt the status quo.

Layoffs in the technology sector

Google CEO Sundar Pichai, foreseeing challenges for his business, advised his team members at a general meeting in July that they need to increase their productivity. He warned them that the happy days of abundance were over. The tech giant and its peers now find themselves in a hostile new environment that will cause the industry to aggressively cut costs and find ways to work more efficiently with fewer workers.

Amazon announced in a blog post Wednesday that it will conduct layoffs. The retail giant will separate about 10,000 employees from payroll, according to the New York Times. Foreshadowing what would come next, HR was also part of the layoff. When HR people are downsized, it’s a harbinger of future layoffs and hiring freezes.

A day later, CEO Andy Jassy warned employees in a company-wide memo, “There will be more role reductions as leaders continue to make changes.” Jassy added that managers will look at their teams and look at “workforce levels” to make the tough decisions about who will stay or be asked to leave for the “long-term health” of the company. Jassy did not qualify the number of people who will be laid off in 2023.

This month, Meta CEO Mark Zuckerberg announced that 11,000 workers would lose their jobs. Meta had to deal with its disastrous foray into the metaverse, privacy issues and the rise of TikTok which stole its success and market share.

Elon Musk, Twitter’s new self-proclaimed “chief twit,” is feeling the pressure to transform the social media company fast. He acquired the tech platform for $44 billion, though Twitter has failed to be profitable for the past eight years. To cut costs, Musk has reportedly cut Twitter staff by 50%, and workers continue to leave the social media platform.

Lyft is cutting 13% of its workforce, about 500 people. This will be the second round of layoffs for the ridesharing company this year. Digital bank Chime is laying off around 160 people, 12% of its staff. Digital payments giant Stripe is cutting 14% of its workforce, CEO Patrick Collison wrote in a staff note. The layoffs will impact more than 1,000 employees.

Real estate platform Opendoor is cutting 550 jobs, 18% of its workforce, CEO Eric Wu announced in a blog post. Oracle, the world’s largest database management company, laid off as many as 200 employees at its cloud infrastructure unit on Nov. 1. This comes a week after the company “quietly” laid off workers at another cloud division. The list keeps growing.

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