Google parent Alphabet is reportedly planning to lay off as many as 10,000 employees based on their performance, The Information reported earlier this week.
The search giant is reportedly planning to use performance as a parameter to sack low performers. Google has as many as 1,87,000 employees.
Meanwhile, the tech behemoth has called the recent media report on possible layoffs as "speculative".
Google, which is often touted as an "employee-friendly" company, has been on a hiring spree over the past two years after the Covid-19 pandemic boosted online spending.
Notably, one of the company's key shareholders recently said that the average salary of an Alphabet employee is much higher as compared to its peers and its inflated workforce needs to be trimmed. In a letter to Alphabet's chief executive officer Sundar Pichai last week, UK hedge fund billionaire Christopher Hohn said that Alphabet's headcount has increased at an annual rate of 20% and has more than doubled since 2017 and is excessive in relation to what the company requires. Hohn is the managing director of TCI Fund Management which owns shares valued at more than $6 billion in Alphabet.
The letter also mentioned that the tech giant pays a salary worth $2,95,884 as per the company's security and exchange filing. It further said that the median compensation at Alphabet was 67% higher than that of Microsoft, which pays compensation at $1,76,858 and 153% higher than the 20 largest listed technology companies in the U.S. which stand at $117,055. Hohn said that the company needs to take aggressive action in order to reduce losses.
"The company has too many employees and the cost per employee is too high. Management should publicly disclose an EBIT margin target, substantially reduce losses in Other Bets and increase share buybacks," Hohn said in the letter.
"During a period of high growth between 2017 and 2021, revenues increased at an annual rate of 23%, cost discipline was not a priority. However, cost discipline is now required as revenue growth is slowing. Cost growth above revenue growth is a sign of poor financial discipline," he added.
The development comes on the heels of mass layoffs across big tech organisations owing to dwindling macroeconomic trends and a looming global recession. According to the data tracked by Layoffs.fyi, a website that tracks layoffs, as many as 1,36,989 employees have been laid off this year so far, by 849 companies globally. Earlier this month, the social media company Meta sacked 11,000 employees, or 13% of its workforce. Microblogging platform Twitter, which was recently acquired by Tesla CEO Elon Musk, sacked 50% of its workforce. In October, software major Microsoft fired 1,000 employees, or 1% of its workforce, in the third round of downsizing. Snap, the parent company of the social media platform Snapchat, sacked 20% of its workforce to restructure its business.