Sack 1.5 lakh more employees, cut compensation: Hedge fund billionaire advises Google CEO

As Google resorted to massive layoffs across teams and slashed around 12,000 employees last week, the CEO of Google and Alphabet, Sundar Pichai received advice from hedge fund billionaire Christopher Hohn to cut the workforce even further by laying off around 1.5 lakh jobs across the company.

A letter from Hohn to Pichai, which was leaked on social media and immediately went viral, states that Alphabet's headcount has grown beyond what is required operationally. "Over the last five years, Alphabet more than doubled its headcount, adding over 100,000 employees, of which over 30,000 were added in the first 9 months of 2022 alone," he wrote. Fortune India could not immediately verify the authenticity of the letter, though it's being widely shared on social media as uproar against Google's decision to slash workforce rises. 

Hohn appreciated Google's move to cut 12,000 jobs but encouraged Pichai to take more steps to cut the overall headcount. "The decision to cut 12,000 jobs is a step in the right direction, but it does not even reverse the very strong headcount growth of 2022. Ultimately, the management will need to go further," the letter states.

He further suggested that Google should aim to reduce its headcount to around 150,000, which is in line with Alphabet's headcount at the end of 2021. "This would require a total headcount reduction in the order of 20%," he said.

He said the management should also take measures to curtail excessive employee compensation. He argued that at Alphabet, in the year 2021, the median salary amounted to nearly $300,000, and the average salary is much higher. "Competition of talent in the technology industry has fallen significantly allowing Alphabet to materially reduce compensation per employee. In particular, Alphabet should limit stock-based compensation given the depressed share price," he adds.

Google had sacked around 12,000 roles in one of the highest headcount reductions in the past year. "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," Pichai said in a letter to the employees last week.

The disgruntled employees of Google who were laid off took to social media to lash out at the company and the Google CEO. "Just in: This is the email which Sundar Pichai, Google’s CEO sent to the 12,000 employees that have been laid off, all around the world.  Just to add context as per a filing from 2020 Pinchai earned $2 million in a year from Google.  His 2023 salary+perks is unknown," said a user.

Another said these tech giants clearly seem to have lost all credibility, when on one hand, they are "actively hiring" and on the other, they "take responsibility" for mass lay-offs."

Another user suggested Pichai take a pay cut instead and relinquish his bonus so more jobs can be saved. The layoffs at Google came two days after Microsoft Corp announced a slashing of 10,000 employees — about 5% of its workforce. Before that, Jeff Bezos-led Amazon announced layoffs of over 18,000 workers, starting January 18, 2023. Marck Zuckerberg-led social media behemoth Meta last year sacked 11,000 employees or 13% of its workforce last year. Elon Musk-led Twitter also sacked 50% of its workforce and is planning to slash its workforce further.