It’s been a brutal start to the new year for tech jobs. Google today announced it will eliminate 12,000 jobs and joined the growing list of companies to announce layoffs less than three weeks into 2023.
“Over the past two years we’ve seen periods of dramatic growth,” Sundar Pichai, CEO of Google and Alphabet wrote in an email to staff earlier today. “To match and fuel that growth, we hired for a different economic reality than the one we face today.” He took full responsibility for the "decisions that led us here," when talking about today's 12,000 layoffs.
2023's Torrid Tech Layoffs Pace
It’s become a common theme — after a hiring spree to meet changing needs and attract top talent during the pandemic, tech companies now find they are faced with uncertain economic conditions.
It seems CEOs did not foresee the COVID comedown, and employees are losing jobs because of that lack of foresight. According to Layoffs.fyi, 1,032 tech companies reduced their workforces in 2022 by 155,126. A report from Challenger, Gray & Christmas said tech layoffs are up 649% in 2022 vs. the prior year, compared to a 13% increase in layoffs from the economy in general.
But 2023 has seen a ferocious pace for tech layoffs. Since the start of 2023, tech companies have already reached nearly one-third of the total from last year: 154 companies have cut 55,324 tech jobs, according to Layoffs.fyi.
Here are some notables:
- Microsoft: On Jan. 18, Microsoft CEO Satya Nadella told employees the company was “making changes” including the reduction of its overall workforce by nearly 5% — or 10,000 jobs — but noted they will “continue to hire in key strategic areas.” “We saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less, Nadella wrote in a letter to employees Jan. 18.
- Salesforce: On Jan. 4, the company announced a 10% reduction in their current workforce, affecting approximately 8,000 employees, as part of a restructuring plan. “I’ve been thinking a lot about how we came to this moment. As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that," Salesforce Co-CEO Marc Benioff wrote in a letter to employees Jan. 4.
- Amazon: Between reductions made in November 2022 and those announced on Jan. 4, Amazon confirmed its intent to eliminate just over 18,000 jobs. "This year’s review has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years," Andy Jassy, CEO at Amazon, wrote in a letter to employees Jan. 4.
Related Article: Microsoft's Azure-OpenAI Integration Tempered by 10,000 Layoffs
Did ChatGPT Play a Part in Google's Layoffs?
But while an impending recession and cautious consumer spending have certainly impacted tech companies, is there another factor at play? Is Google feeling the heat from emerging generative AI startups, especially OpenAI and its globally-gripping ChatGPT bot that has caught the attention and investment of Microsoft?
Speculation on that is apparent on Twitter. And, further, one news source reports Google's layoffs affects its AI division:
Meanwhile, Microsoft has a potential $10 billion investment in OpenAI's ChatGPT and debuted its Azure-ChatGPT integrations this week, a move that some speculate could position Microsoft to challenge Google as the search engine of choice.
Earlier this week, OpenAI announced it will soon offer a "pro" version and offered interested parties the opportunity to join a waitlist for professional ChatGPT access that features no blackout windows, a faster response time and unlimited messages. The company emphasizes that this is "an early experimental program that is subject to change," and paid pro access will not be generally available at the moment.
Google CEO Has Artificial Intelligence on his Mind
Google's CEO said nothing about ChatGPT or its now Microsoft-backed creator, OpenAI, expectedly, but did mention "AI" three times in his memo to employees today announcing the layoffs.
"Pivoting the company to be AI-first years ago led to groundbreaking advances across our businesses and the whole industry," Pichai noted. "Thanks to those early investments, Google’s products are better than ever. And we’re getting ready to share some entirely new experiences for users, developers and businesses, too. We have a substantial opportunity in front of us with AI across our products and are prepared to approach it boldly and responsibly."
Pichai also expressed confidence with the "huge opportunity" the company has because of the value of its products and services and its "early investments in AI."
"To fully capture it," he added, "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. They cut across Alphabet, product areas, functions, levels and regions."