Is Google the Next Big Tech Company to Layoff Workers? One Chart Shows Mega-Cap Revenue and Headcount Growth
Around 210,000 tech employees have been laid off this year, with a whopping 40% of them coming in the fourth quarter, investment bank $Jefferies Financial (JEF.US)$ wrote in a Wednesday research note, citing data from TrueUp.
Jefferies's analysis found the average company in its internet and software coverage universe has 36% fewer job listings now than at the start of this year. Analysts said it's a signal of the "excess" that tech brought on during a "period of easy money."
"The new reality is that demand is fading," said Brent Thill, the lead analyst on the note. "And employee hirings have been so brisk that if we're effectively headed into a recession, it's only inevitable that we're going to have more cuts.”
Google is the only mega-cap tech company that has not announced layoffs, Jefferies pointed out, although it noted that it implemented a hiring freeze earlier this year.
"You're seeing continued evidence that large, medium, and small companies are all in a rationalization period of what's happening," Thill said, adding that "the demand is not there and their cost pressures are out of line."
The Jefferies note contrasted these big three firms' headcount in contrast with their falling revenues, illustrating the mismatch—and the rationalization that needs to happen.
The reductions in headcount stem from overhiring during the pandemic, which the analysts note are needed to "regain operating efficiency with a headcount that matches current demand trends." And both $Amazon (AMZN.US)$ and $Meta Platforms (META.US)$ underperformed in their third quarter earnings of this year—quite a shift from their pandemic-era success.
Google's parent company $Alphabet-A (GOOGL.US)$ $Alphabet-C (GOOG.US)$ has not even stated that there might be layoffs. But, that's not stopping the rumors from swirling and current employees from getting nervous.
Google recently announced a new performance management system. The new system requires Google managers to rank 6% of their employees as poor performance, an increase from the previous base line of 2%. 6% of the global Google workforce equates to around 10,000 staff.
This doesn't directly link to layoffs, but it does mean that a much higher number of employees at the company will be rated poorly at their annual review than they were before.
Source: Jefferies, Forbes, Fortune
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