Friday, Oct 07, 2022

After Google’s Hiring Slowdown Missive, Microsoft Announces Job Cuts

A spate of layoffs by tech majors like Twitter, Microsoft, and Netflix and slowing down of hirings by Google, Meta, Spotify and Uber is worrying existing and prospective employees

Source: Shutterstock
Source: Shutterstock

Be more entrepreneurial, work with greater urgency, sharper focus, and more hunger than shown on sunnier days—that is what Sundar Pichai, CEO of Alphabet, told employees in an email on Tuesday. Of course, one statement stood 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 told that in some cases, this meant consolidating where investments overlap and streamlining processes. In other cases, that meant pausing deployment and re-deploying resources to higher priority areas. 

While trying his best to galvanize employee morale, in his memo, Pichai stated, "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 added that Google would focus on hiring in engineering, technical and other critical roles through 2022. His email hinted that the tech major's earlier pace of hiring this year is one reason for the calibrated slowdown. Pichai claimed 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 of new engineer 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.

Cyber Monday Tech Sale by Digital Subs

Joining Meta's ranks is Microsoft, laying off employees 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 had been eliminated due to 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 announced 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, and letting go of some contractual workers and editorial staff from its Tudum site in April. In a statement released on 24 June, Netflix said, "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 sounded a warning bell about hiring in the same month was Spotify. Its CEO, Daniel Ek, emailed 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, of Snap Inc too, wrote 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, cautioned 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 explained that this move addressed 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 and 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 the end of 2021, which is a 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 would employ 1 lakh people by 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, compared to the month before.

A report by global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc threw up some dismal figures. It showed that US-based tech employers announced 4,044 cuts in May 2022, up 781% from the 459 cuts the industry reported in January through April. It is the highest monthly total since December 2020, when tech companies 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. Coupled with inflation and interest rate concerns, they are restructuring their workforces to cut costs and shore up capital," said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.

This echoed what Snapchat's Spiegel stated in his May memo to employees. He shared 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 wrote.

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 of 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 measures to protect their margins, tech majors in the US would be better served by hiring qualified and, often well-trained, 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.