By Kenneth Tiven in Washington
The irony, perhaps, is that two of the biggest companies laying off people are Google and Microsoft, both run by CEOs of Indian origin. Sundar Pichai, the CEO of Google and parent holding company Alphabet, said: “We’ve decided to reduce our workforce by approximately 12,000 roles. We’ve already sent a separate email to employees in the US who are affected. In other countries, this process will take longer due to local laws and practices.
“This will mean saying goodbye to some incredibly talented people we worked hard to hire and have loved working with. I’m deeply sorry for that. The fact that these changes will impact the lives of Googlers weighs heavily on me, and I take full responsibility for the decisions that led us here. Over the past two years, we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today.”
At Microsoft, CEO Satya Nadella warns of a challenging two years ahead for tech companies as it announces the layoff of 10,000 employees between now and the third quarter of 2023. It is still being determined where these jobs are located in a company with 2,20,000 employees.
These companies are not on the brink of financial ruin. Quite the contrary. Why shed people? Tech industries grew in the past three years during the pandemic. Covid-19 shifted workers to remote work, increased online shopping and the rise of cryptocurrencies all aided the expansion of tech companies and their market valuations. Amazon boomed, yet it is now firing 18,000 employees, about 1,000 of whom are in India.
Inflation and rising prices for multiple reasons have created global discontent, causing central banks to aggressively raise interest rates, believing this will put the brakes on consumer inflation. Investors—international hedge funds primarily—predict company valuations will drop because a global economic slowdown is looming. In this situation, investors worry only about money, not people. They suggest companies shrink staffing to decrease operating costs.
Google joins a list of other technology companies that have laid off workers after concluding they had over-expanded, believing the pandemic-fuelled boom represented a new normal. Meta, the parent of Facebook, along with Salesforce and Twitter, among other firms, have announced thousands of job cuts. Layoffs.fyi, a website that tracks employment and firings in the technology sector, estimates that more than 1,90,000 jobs globally have been cut by technology firms in the past 13 months.
While Microsoft is making cuts, Nadella says the company “will continue to hire in key strategic areas”. Affected US employees will receive “above-market severance pay, healthcare coverage for six months, continued vesting of stocks for six months, career transition services and 60-day notice prior to termination”. It is still being determined how workers outside the USA will be treated. It will be difficult for Indians working in the USA on H1B visas to find alternative employment or depart the country within 30 to 60 days. Nadella’s memo reveals the company is taking a $1.2 billion charge in its Q2 earnings “related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation as we create higher density across our workspaces”.
Microsoft will announce its fiscal 2023 second-quarter earnings later this week. Staff cuts and a $1.2 billion charge suggest some missed revenue targets in parts of Microsoft’s business. Microsoft ended its 2022 fiscal year with $198 billion in revenue and $83 billion in operating income—and with its Microsoft Cloud surpassing $100 billion in annualized revenue for the first time.
Pichai, the Google boss, said in a memo:
- We’ll pay employees during the full notification period (minimum 60 days).
- We’ll also offer a severance package starting at 16 weeks’ salary plus two weeks for every additional year at Google and accelerate at least 16 weeks of GSU vesting.
- We’ll pay 2022 bonuses and remaining vacation time.
- We’ll be offering six months of healthcare, job placement services and immigration support for those affected.
- Outside the US, we’ll support employees in line with local practices.
Amazon indicated that Amazon web services (AWS) is not affected by the layoffs at the retail business, but will continue in a “hiring pause” for the time being.
When firings are on this scale, it does not reflect on the worker’s competence, but on the fear of corporate executives. In America and India, people who have lost their jobs are taking to the Internet to explain their sudden availability.
—The writer has worked in senior positions at The Washington Post, NBC, ABC and CNN and also consults for several Indian channels