Back at the end of May, we reported that contrary to the artificially rosy picture created by the BLS's seasonally-adjusted Establishment Survey (which we now know is substantially weaker than the Household Survey which has flatlined since March), company after company was warning that it will either freeze hiring amid a historic profit margin crunch - or had announced outright layoff plans, which Piper Sandler compiled in one startling table.
Since then the list has grown extensively, and late on Tuesday we finally hit the motherlode: none other than the third largest company in the world, Google parent Alphabet, revealed its plans to slow hiring for the remainder of the year in the face of a potential economic recession, CEO Sundar Pichai told staffers on Tuesday in a company-wide email.
Pichai said the company will focus on hiring “engineering, technical and other critical roles,” in 2022 and 2023, according to a copy of the email viewed by Bloomberg News (the email is below)..
“Moving forward, we need to be more entrepreneurial, working with greater urgency, sharper focus, and more hunger than we’ve shown on sunnier days,” Pichai wrote. “In some cases, that means consolidating where investments overlap and streamlining processes.”
Why is today's announcement notable? Because as Bloomberg notes, historically Google has been largely immune to the business cycle and the economic dips of the tech sector. While the internet giant paused hiring after the financial crisis more than a decade ago, it has since regularly added waves of new employees for its main advertising business as well as areas such as smartphones, self-driving cars and wearable devices that aren’t yet profitable. Google parent Alphabet, which employed almost 164,000 people as of March 31, has hired primarily in recent years for Google’s cloud division and new fields like hardware.
Ominously, Google’s move mirrors that of other, far smaller and much more challenged tech companies: in May, Snap and Lyft said they would slow hiring. Several weeks later, Instacart also said it would dial back job growth and Tesla followed with an announcement of a 10% reduction for its salaried workforce (see table above). Then earlier this week, Microsoft announced it was cutting a small number of jobs. Facebook, or Meta Platforms as it is now known until it reverts back to its original name, also reduced its hiring plans because of concerns over economic conditions.
In the email, Pichai said Google added 10,000 staffers during the second quarter and had “strong commitments” in the next few months to hire college recruits.
Here is the full email from Bloomberg
Hard to believe we’re already through the first half of 2022. It’s the right opportunity to thank everyone for the great work so far this year, and to share how my Leads and I are thinking about H2.
The uncertain global economic outlook has been top of mind. Like all companies, we’re not immune to economic headwinds. Something I cherish about our culture is that we’ve never viewed these types of challenges as obstacles. Instead, we’ve seen them as opportunities to deepen our focus and invest for the long term.
In these moments, I turn to our mission: to organize the world’s information and make it universally accessible and useful. It’s what inspired me to join the company 18 years ago, and what makes me so optimistic about the impact we are able to have on the world. Knowledge and computing are how we drive our mission forward. That’s the lens we use to decide where to invest -- whether it’s in areas like Search, Cloud, YouTube, Platforms and Hardware, the teams that support them, or in the AI that enables more helpful products and services.
We help people and society when we focus on what we do best, and do it really well. The investments we’ve made in the first half of the year reflect this vision. In Q2 alone, we added approximately 10,000 Googlers, and have a strong number of commitments for Q3 start dates which reflects, in part, the seasonal college recruiting calendar. These are extraordinary numbers, and they show our excitement about long-term opportunities, even in uncertain times.
Because of the hiring progress achieved so far this year, we’ll be slowing the pace of hiring for the rest of the year, while still supporting our most important opportunities. For the balance of 2022 and 2023, we’ll focus our hiring on engineering, technical and other critical roles, and make sure the great talent we do hire is aligned with our long-term priorities.
Moving forward, we need to be more entrepreneurial, working with greater urgency, sharper focus, and more hunger than we’ve shown on sunnier days. In some cases, that means consolidating where investments overlap and streamlining processes. In other cases, that means pausing development and re-deploying resources to higher priority areas. Making the company more efficient is up to all of us -- we’ll be creating more ways for you all to engage and share ideas to help, so stay tuned.
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.