Alphabet (GOOGL), which is the parent company of Google, has recently announced its plans to cut around 12000 jobs. This comes at a time when the company is facing a very different economic situation. The plan was recently shared in a staff memo in which Alphabet also stressed the need to focus more on AI (artificial intelligence).
Alphabet has also made it clear that the staff working on experimental projects will be laid off as well. Overall, around 6% of Alphabet's workforce will be fired if this development turns out to be true.
This comes at a time when other tech companies, such as Amazon and Microsoft, are also following a downsizing plan after a pandemic hiring spree. At the height of the pandemic, all the tech companies experienced unprecedented growth, which led them to hire more people. But now that the economic condition is getting dire, many are resorting to cutting jobs.
Alphabet company increased its workforce through 2020 - 2021 by almost a third. But now, the company is moving towards downsizing and wants to shift its focus toward AI projects. On Friday, the shares of Alphabet were up by 2% as the job cuts will have a positive effect on the company's profitability.
In the last 12 months, Alphabet shares are lost 30% of their value while the tech sector, in particular, saw a drop of 24%. So even on that front, Alphabet's stock performance is worse than the industry's standard.
Sundar Pichai, who is leading the company as the Boss, said he would be taking full responsibility for the recent jobs cut decision.
Recently, another interesting development has occurred at the Alphabet. It was decided that the pay of Google's CEO would now be tied to performance.
And let's not forget about the emergence of ChatGPT which poses a very real threat to Alphabet's search engine 'Google'. We are also receiving reports that Microsoft is planning to increase its stake in the ChatGPT which also poses a threat to Alphabet.