Be more entrepreneurial, work with greater urgency, sharper focus, and more hunger than shown on sunnier days—that is what Sundar Pichai, CEO, Alphabet tells employees in an email on Tuesday. Of course, one statement stands out amidst these motivating words; that its company, Google, would be “slowing the pace of hiring for the rest of the year, while still supporting our most important opportunities.”
In his missive, Pichai says that in some cases this means consolidating where investments overlap and streamlining processes. In other cases, that means pausing deployment and re-deploying resources to higher priority areas.
While trying his best to galvanise employee morale, in his memo, Pichai states, “Scarcity breeds clarity—this is something we have been saying since the earliest days of Google. It’s what drives focus and creativity that ultimately leads to better products that help people all over the world. That’s the opportunity in front of us today, and I’m excited for us to rise to the moment again.”
At the same time, he adds that Google would focus on hiring in engineering, technical and other critical roles through 2022. His email hints that the tech major’s earlier pace of hiring this year is one reason for the calibrated slowdown. Pichai claims that the tech giant had hired about 10,000 new employees in Q2, with more joining the ranks this quarter.
The Growing Queue Of Cautious Tech Employers
Google is the latest to join a rising number of tech companies easing the hiring pedal. Social media platform, Twitter, which is embroiled in a legal wrangle with billionaire Elon Musk over an impending $44 billion takeover bid, laid off 30% of its talent acquisition team last week.
Interestingly, on 30 June, Musk’s company, Tesla, too laid off nearly 200 employees from its Autopilot division and shut down the California office where they worked. In mid-June, he shared his plans to cut 10 per cent of salaried staff, while increasing hourly jobs.
Meta, Facebook’s parent company, is also reducing its software engineer hiring targets, bringing it down to 7,000 from its earlier projection of 10,000 people. At a weekly Q&A session earlier this month, CEO Mark Zuckerberg told employees that the social media giant was undergoing one of the worst downturns it had experienced in recent history. He revealed that the company was slashing its target number for new engineers hires by about 30 per cent, while giving existing employees more aggressive goals.
"I think some of you might decide that this place isn't for you, and that self-selection is okay with me. Realistically, there are probably a bunch of people at the company who shouldn't be here," he said at the session.
Joining Meta’s ranks is Microsoft, which is laying off employing for the first time in five years. A Microsoft spokesperson revealed to CNBC that the company had “notified a small number of employees that their roles have been eliminated as a result of a strategic realignment. Like all companies, we evaluate our business on a regular basis. We continue to invest in certain areas and grow headcount in the year ahead."
In June-end, Netflix Inc announces that it had laid off 300 employees, or about 4% of its workforce. This was the second round of job cuts by the streaming company, after retrenching 150 people in May, in addition to letting go some contractual workers and editorial staff from its Tudum site in April. In a statement released on 24 June, Netflix says, "While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth."
Another streaming company that sounds a warning bell about hiring in the same month was Spotify. Its CEO, Daniel Ek emails the staff that while it would continue hiring, the pace would be slowed over the next few quarters "and be a bit more prudent".
On 23 May, Evan Spiegel, CEO, Snap Inc too writes a note to employees, mentioning that the company will “slow its pace of hiring for the rest of the year .. as the economy has definitely deteriorated further and faster than we expected.” While the photosharing platform would still hire 500 new employees by 2022-end, this is much lower than the 2,000 employees it had hired the year before.
On 9 May, Uber’s CEO, Dara Khosrowshahi cautions employees in an email that the company will “treat hiring as a privilege and be deliberate about when and where we add headcount. We will be even more hardcore about costs across the board.” He explains that this move was to address a “seismic shift” in investor sentiment, which he observed after spending several days meeting investors in New York and Boston.
Zoom In Behind The Gloom And Doom
This spate of layoffs and hiring freezes have sent warning bells ringing in the tech sector and amongst employees, including those working in the company as well as those waiting to join the ranks. This is understandable, since most of these despondent announcements are from companies that comprise top employers globally.
In the quarter ended March 2022, the number of employees in Alphabet went up to 163,906 from 139,995 in the same period last year. Amazon’s fourth quarter earnings report showed it had over 1.6 million employees by of the end of 2021, which is 24% growth from 2020. Apple’s employee strength for the fiscal year ended 30 September 2021 stood at 154,000, while a NY Times report pegged Meta’s global staff strength at 77,800. Tesla’s annual SEC filing showed that it employs 1 lakh people at the end of 2021. On-demand audio service, Spotify, employs about 8,230 people worldwide.
According to the TechServe Alliance, the number of IT jobs in the US remained flat in May compared to April, though demand for tech talent remains strong. The number of IT jobs in the country totaled approximately 5.4 million in May, moving up marginally by 0.04%, or 2,400 jobs as compared to the month before.
A report by global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc threw up some more dismal figures. It showed that US-based tech employers announced 4,044 cuts in May 2022, up 781% from the 459 cuts the industry announced in January through April. It is the highest monthly total since December 2020 when companies in the industry announced 5,253 job cuts.
“Many technology startups that saw tremendous growth in 2020, particularly in the real estate, financial, and delivery sectors, are beginning to see a slowdown in users, and coupled with inflation and interest rate concerns, are restructuring their workforces to cut costs and shore up capital,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.
This echoes in what Snapchat’s Spiegel states in his May memo to employees. He shares that the company is facing rising inflation and interest rates, supply chain shortages, labor disruptions and platform policy changes in addition to a negative impact from the war in Ukraine. “Our most meaningful gains over the coming months will come as a result of improved productivity from our existing team members,” he writes.
Indians on tenterhooks, or not?
The slowing of hiring by tech companies can have far-reaching ramifications for Indian technology professionals. Some are worried that as the US economy slows down, companies could retract their job offers or get into tough job negotiations with existing employees, if not holding out any hiring completely.
But all might not be lost. Offering a contrarian view, a recent NASSCOM study found that the US had the highest demand–supply gap in tech talent, at around 29 per cent in 2020-21. China’s demand–supply gap was a shade shy at 24 per cent.
On the other hand, the tech talent in India was 21.1 per cent and stood at 3.8 million in 2021 whereas the total employee base in the tech industry is 4.7 million.
While tackling a slowdown and undertaking course correction protect their margins, tech majors in US would be better served by hiring tech talent from India. After all, even Elon Musk had once tweeted, “USA benefits greatly from Indian talent!" Surely, he knows what he is talking about.
