The year 2023 will see 1600 employees being fired per day in the tech sector due to the ongoing Ukraine war, the COVID-19 pandemic, soaring inflation, and a rapidly warming planet. Experts believe that a recession is inevitable in 2023, and the global GDP is expected to grow a mere 1.7%.
At the ongoing Davos 2023 annual meeting of the World Economic Forum, it was concluded that while the outlook for the global economy is gloomy, inflation and customer sentiment are expected to improve. Google recently announced it would cut 12,000 jobs, and Microsoft recently laid off 10,000 workers. LinkedIn believes that the “big quitting” or “great resignation” will continue. Let us dissect the layoffs at Google and try to gauge the motivation behind the layoffs and potential outcomes.
Tech companies across the globe are shedding staff due to slower growth, investor pressure, and financial inertia. This is reflected in the stock prices of both Apple and Google, which have experienced a downward trend from December 2021 levels.
The layoffs came as a shock to many employees, as they were high-performers and were rated well in Google’s internal rating system, and most of them held managerial positions making between $0.5 and $1 million a year.
The experience and salaries made by the majority of laid-off employees beg the question: how could an AI-first company not predict business in times of high growth? Is it true that high-growth-fueled hiring caused the layoffs, or are new hires not the majority of those let go?
Google is laying off highly paid staff due to the slow growth of the economy and a looming recession. Revenue generated per employee is the key reason behind the layoffs, as the pandemic-fuelled digital bubble collapsed, meaning even the high-performing employees who did not directly contribute to earnings were let loose.
Will the layoffs help Google? Prof. Jeffrey Pfeffer, at the Stanford Graduate School of Business, explained that layoffs will not necessarily increase profitability or boost total revenue. Alphabet was more focused on eliminating lagging products and groups within the company to cut off potential dead weight. The layoffs are a result of the storm that has been brewing for some time.