Tech companies had become quite bloated after the ZIRP era of the mid 2010s, but they seem to be getting back into shape.
Google has cut 10 percent of its management positions over the last two years, CEO Sundar Pichai revealed in a town hall. The cuts were made across Manager, Director, and Vice President jobs. Some positions were eliminated entirely, while others were converted to individual contributor roles.
The acknowledgement of the reduction of 10 percent of management roles comes after Google had laid off 12,000 workers last year, which amounted to 6 percent of its workforce. We hired for a different economic reality than the one we face today,” Alphabet CEO Sundar Pichai had said while announcing the job cuts. The newer reality seemed to imply greater efficiency at the 27-year-old company — Pichai had said that the company needed to become 20 percent more efficient. Pichai had also said that Google needed to tweak its much-lauded corporate culture, noting that the concept of “Googleyness” needed updating for the modern era.
Even prior to the layoffs, there had been concerns that Google and other tech companies had become too bloated. Thanks to Google’s dominance in search which earned it billions of dollars of profit a year largely on autopilot, Google was able to provide extraordinary perks to its employees, and rapidly grow their numbers. The larger workforce meant that these employees weren’t necessarily of the same quality as those who’d been hired in the early years, but they got used to the same perks and privileges. In particular, non-engineering roles grew rapidly, as layers upon layers of management and supporting functions were added. Many of these employees didn’t have much to do, so they spent their time making “Day in the life of a Google employee” videos for TikTok, while others took up political causes, and were primarily focused on enacting woke policies at the company.
Things came to a head in late 2022 when OpenAI released ChatGPT, and the product immediately went viral. Google had been caught napping in the AI race, and a startup had managed to build the first breakthrough product in AI. To make matters worse, the stock markets for tech stocks sharply correctly around that time, and Google’s stock was battered. Google then decided to make changes, first laying off 12,000 workers, and introducing its new efficiency mantra.
And with 10 percent fewer management positions at the company, Google’s decision seems to be already seems to be showing results. Google has managed to outshine OpenAI’s year-end AI releases with products like its video generator Veo 2, and its newer Gemini Flash models. Google has also come out with interesting new AI products, like Notebook LLM which generate podcasts through AI. Google might have been stung by OpenAI’s advances, but with a trimmed workforce and leaner organization structure, it appears to be all set to fight back.