Google CEO Sundar Pichai informed the company on Friday that some 12,000 positions would be eliminated as a result of macroeconomic turmoil. The layoffs will impact approximately 6% of the company’s workforce of nearly 187,000.
“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. I am confident about the huge opportunity in front of us thanks to the strength of our mission,” Pichai said in a memo. “To fully capture it, we’ll need to make tough choices. So, we’ve undertaken a rigorous review across product areas and functions to ensure that our people and roles are aligned with our highest priorities as a company. The roles we’re eliminating reflect the outcome of that review.”
The news comes days after Microsoft CEO Satya Nadella revealed that the company would dismiss some 10,000 employees and weeks after Amazon CEO Andy Jassy unveiled a total headcount reduction of 18,000 employees. Technology companies dismissed more than 90,000 workers last year, according to a report from CrunchBase.
“As an almost 25-year-old company, we’re bound to go through difficult economic cycles,” Pichai continued. “These are important moments to sharpen our focus, reengineer our cost base, and direct our talent and capital to our highest priorities.”
White House Press Secretary Karine Jean-Pierre deflected questions from journalists on Wednesday regarding the sector’s layoffs. One reporter noted that President Joe Biden has appeared “quite optimistic” in his latest statements about the economy and asked whether the Microsoft layoffs are a “matter of concern” for the administration. Jean-Pierre responded that the commander-in-chief watches closely “anytime there are reports of Americans losing their jobs.”
“I don’t have a comment on specific moves announced by particular companies. As you know, we’re very careful from here talking about private companies. But more broadly speaking, layoffs remain near record lows according to job openings data,” she continued. “Companies across the economy are continuing to grow and invest in the United States.”
When another reporter asked how continued dismissals would “impact the recovery in the coming months,” Jean-Pierre replied that “layoffs remain near record lows” across the economy. “We’re seeing the President’s economic policy actually working,” she said. “Is there more work to do? Always more work to do, and you hear that from us as well.”
The technology sector layoffs occur as many prominent investors criticize executives for rapidly expanding payrolls, calling for a reduction in headcount to match dismal market forecasts for the near future. The dismissals also come after the Federal Reserve raised interest rates by three-quarters of a percentage point on four consecutive occasions before implementing a half-percent increase last month, increasing borrowing costs for businesses and consumers.
Officials at the central bank have previously warned that economic fallout from the rate hikes would produce higher unemployment. “While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses,” Federal Reserve Chair Jerome Powell remarked last year. “These are the unfortunate costs of reducing inflation.”