Google slows down its hiring: lean times for technology companies are coming

0
12
Sundar Pichai, CEO of Google and Alphabet.
google slows down its hiring: lean times for technology companies

Sundar Pichai, CEO of Google and Alphabet.

The big technology companies are facing a lean period. At least that seems to be deduced from the announcements made by many of them about hiring freezes or direct dismissals in their templates. All this after a hiring fever between 2020 and 2021, mainly due to the Covid-19 pandemic, which triggered the need for technological employment. Google CEO Sunday Pichar has sent his employees a memo in which he warns of a hiring slowdown at the company.

According to the communication to which The Verge has had access, the company is not freezing hiring completely, since will continue to hire professionals for “engineering, technical and other critical functions”. But Pichai does admit that rolling back would mean “pausing development and redeploying resources to higher priority areas.”

Google’s chief executive is warning his staff that the company will have to “be more entrepreneurial” and work with “greater urgency, sharper focus, and hungrier than we’ve shown on sunnier days.” In some cases, that means consolidating overlapping investments and streamlining processes. In others, that means pausing development and redistributing resources to areas of higher priority. Making the company more efficient depends on all of us.”

The uncertain global economic outlook is behind the decision, Well, as the manager points out, Google is not immune to economic headwinds. The CEO of Google assures that only in the second quarter they have hired 10,000 people, “but due to the hiring progress achieved so far this year, we will slow down the pace of hiring for the rest of the year, while supporting our most profitable opportunities. important (…) We will ensure that the great talent we hire is aligned with our long-term priorities.” The manager defends that “scarcity generates clarity. It’s what drives focus and creativity, which ultimately leads to better products, and that’s the opportunity we have.”

Google isn’t the only big tech making adjustments to its hiring. This Tuesday Microsoft also announced that it will reduce about 1% of its workforce (this amounts to 180,000 employees), although it attributed it to a “strategic readjustment” at the beginning of its new fiscal year. “Today we have notified a small number of employees that their roles have been removed. This is the result of a strategic readjustment and, like all companies, we regularly evaluate our business,” the multinational told CNBC.

SEE ALSO  Recover the old Google Time with this free application: our dear little frog will not miss the appointment

In the case of Microsoft, the layoffs will occur in different geographies and specializations. The company, which posted strong earnings in the third quarter, with a 26% year-over-year increase in cloud revenue and total revenue of $49.4 billion, lowered its revenue and profit forecasts in June citing the impact of fluctuations in the currency exchange. The software giant has previously ordered several teams to be more cautious in hiring, but said yesterday that it will continue to “invest in certain areas” and that it expects to “increase” the number of employees next year.

Other companies that have also put on the table the need to control their expenses are Uber, Meta, Spotify, Salesforce, Nvidia, Lyft, Snap and Intel. All have announced plans to curb hiring this spring and summer. The mobility platform told CNBC that new hires should be “treated as a privilege” and that they would be much more restrictive when their different units ask management for a budget for new staff. He also advanced cuts in marketing expenses. Salesforce, for its part, which has hired more than 30,000 workers since the start of the pandemic, has also said it is limiting corporate travel and ruling out any company buyouts. He still has to digest the acquisition of Slack in December 2020 for 27.7 billion.

In the case of Meta, on July 1 its CEO Mark Zuckerberg told his employees that he was cutting his plans to hire engineers by at least 30% this year. The company planned to sign between 6,000 and 7,000 engineers in 2022, when its initial plan contemplated incorporating about 10,000. The executive warned that the economy is headed for a deep recession and went on to ensure that “realistically, there are probably a lot of people in the company who should not be here.” In the last two years, Meta had increased its workforce by 60%, to 77,800 employees, due to the fact that the Covid triggered the consumption of digital products and its ambitious plans for the metaverse. The macroeconomic context is expected to impact the advertising business, Meta’s main source of income. The company has already reduced its net profit by 21% in the first quarter of this year, to 7,464 million dollars, although its income rose 7% to 27,900 million (its lowest quarterly growth since it was listed).

SEE ALSO  Google Maps warns you about speed cameras, but this app is much more effective

Twitter, Netflix, GameStop and Tesla, for their part, have already laid off people from their teams in recent months amid an economic climate that combines inflation, interest rate hikes and slower growth. The former laid off a third of its hiring team last week, and the automaker laid off hundreds of employees in the last month. The international political instability derived from the war in Ukraine has complicated the scenario and many technology companies have chosen to take preventive measures to try to stabilize their accounts before they get worse. According to some US media, Oracle is considering a $1 billion cost-cutting initiative that would include thousands of layoffs.

Amazon, one of the world’s largest employers, has not made similar moves, at least for now, but has suggested that it will not immediately hire more staff, at least in the US and in its logistics area, as The company made a large number of hires during the pandemic to cope with the increase in activity of its online store and cover the losses due to Covid, and now, with the recession looming, its sales may slow down. The ecommerce giant closed 2021 with 1.6 million employees, more than double that of 2019.

All of this is causing the euphoria around tech to fade. and impact on their stock market valuations. Only Meta has lost more than half of its capitalization so far this year (51.46%), Uber has fallen 48.56% in its stock market value in the same period, and Salesforce, 34.5 %, despite having continued to increase earnings quarter by quarter. The Nasdaq as a whole fell 28%.

SEE ALSO  Get in shape with your mobile: the tricks to use Google Fit, the health app that you probably have installed

Although behind these decisions to freeze or destroy jobs there are common factors, such as the end of the confinement economy and the macroeconomic situation, there are also reasons of their own that each company cites. Meta points to the impact on its advertising revenue of Apple’s new rules on the privacy of its users, Uber the heavy losses due to its investments in several start-ups with unstable financial health, Twitter the great uncertainty after Musk’s refusal to carry its purchase, and Netflix the loss of subscribers, partly due to the cessation of its activity in Russia, but also due to increasingly fierce competition.

“Much of what we are seeing now is a phase of technology maturity in which these companies cannot and do not need to continue to grow at the same rate. The adjunct professor at the UCLA business school, Terry Kramer, tells AFP. Experts also believe that high inflation puts pressure on central banks to raise interest rates, hampering the ability of companies to borrow, a particularly unfavorable situation for technology companies. “Many companies that went for a growth strategy, not expecting short-term profits, thought they could continue to make money through the stock market or private investors,” adds Daniil Manenkov, an expert in economic forecasting at the University of Michigan. .