Following a dip in Google ad sales, CEO Sundar Pichai hints at laying off workers to boost the efficiency of the company by 20%
Sundar Pichai, CEO of Google, hinted at job cuts when he said he wanted to make his company 20% more efficient by making sure that “workers are truly productive.” Pichai spoke at the Code Conference in Los Angeles about his goals to manage the business more effectively in light of the current state of the economy and a general slowdown in ad expenditure, from which Google has so far benefited the most.
This is not the first time this year that Google hinted at a workforce cut. Employees received an email from Sundar Pichai in July informing them that parent company Alphabet planned to halt hiring and urging them to “be more entrepreneurial.”
Pichai wrote in an email to employees, “We need to be more entrepreneurial working with greater urgency, sharper concentration, and more hunger than we’ve demonstrated on sunnier days.
In the leaked memo, Pichai also expressed concern about the state of the overall economy and stated that the company would “be decreasing the pace of hiring for the rest of the year” to concentrate on “engineering, technical and other essential areas” for 2022 and 2023.
This time again Google indicated slashing its workforce as Pichai said that they want to make sure as a business when one has fewer resources than before, one is prioritizing all the correct things to be working on and people are incredibly productive, so that’s what they are focusing.
The Google CEO went on to say that the business was aiming for a 20% increase in productivity, saying, “Across everything we do, we may be slower to make judgments. You examine the entire process and determine how to increase productivity at the company by 20%.”
Pichai recognized the company had gotten “slower” as a result of the company’s massive increase in headcount while referring to macroeconomic instability.
“The more we try to comprehend macroeconomics, the more unsure we feel about it. Advertising spending, consumer spending, and other expenditures are tied to macroeconomic performance,” he continued.
The withdrawal, he continued, will involve “pausing development and re-deploying resources to higher priority areas,” but the corporation “isn’t suspending hiring totally; it’ll still hire engineering, technical, and other important personnel.”
How Google’s ad sales growth slowed down?
The decline in advertising revenue that has occurred since Apple introduced its new data policy, together with weaker-than-expected profitability for the second consecutive quarter, can also be linked to Google’s employment slowdown.
Despite its scale, Google has been one of many online advertising corporations to issue warnings about a downturn in ad demand amid high inflation and economic fears.
Google revealed that its core advertising business generated $56 billion in revenue during the three months ending June 30. That represents a gain of 11.6% compared to the same quarter last year when it achieved an increase in ad income of nearly 69% thanks to the epidemic boom in internet advertising.
Google nearly missed the sales and earnings projections made by Wall Street experts for the quarter. In contrast to the $69.9 billion experts had predicted, the business reported revenues for the quarter of $69.7 billion, an increase of 13% from the same period last year. The quarter’s net income decreased by more than 13% year over year to $16 billion, falling short of Wall Street expectations of $17.3 billion.
Even still, investors did not seem to be alarmed by the numbers, presumably in part because Twitter (TWTR) and Snap (SNAP) both revealed comparable slowdowns in ad sales growth last week. Following the story, shares of Google parent Alphabet (GOOGL) increased by more than 2.5% in after-hours trade.
Compared to other online ad formats, Google’s Search advertising is frequently thought to be more resilient to economic fluctuations. Nevertheless, Google’s business may continue to suffer in the next quarters as a result of the difficult macroeconomic environment. In light of the market slump and ongoing economic uncertainty, Google previously stated that it intends to restrict the pace of hiring and reevaluate investments for the balance of this year.
Sundar Pichai, CEO of Alphabet, said, “We are focused on hiring engineering, technical, and other important skills and we are aiming to boost efficiency.”
To create technologies that are useful both in stable and uncertain times is a privilege, said Pichai.
A positive aspect of Google’s financial performance was the cloud computing division’s nearly 36% year-over-year revenue growth.
“While advertising spending will fluctuate with economic cycles, the overall shift to Cloud computing as the backbone for all digital business — advertising, marketing, and sales — is long-term,” said Tom Johnson, the global chief digital officer at media company Mindshare Worldwide, in an investor note after Google’s earnings report.
Can slashing down the workforce increase the efficiency of Google?
Lack of or inadequate communication at work is one of the most common factors contributing to inefficiency. It will have an impact on people’s ability to evaluate their progress, determine whether their efforts are having any effect, and respond promptly enough to make a difference.
Inefficient behavior reigns in a workplace where employees are unaware of their responsibilities or, worse still, are aware of their responsibilities yet nonetheless pass them on. People inside the organization must be given responsibility in line with their jobs.
Having more people making decisions can make chaos and lead to a wrong step. So having fewer but productive employees are more important rather than having a large amount of them. By slashing down the workforce, employees will get more serious with their work, and increasing their productivity can help Google to become more efficient.
Profits can rise when the company is efficient. Google will be able to broaden its product offering and put more of its attention on the goods with less money spent and more time available. Larger orders can be filled, and as a result of increased sales, the company’s revenues will increase over time.
edited and proofread by nikita sharma