A potential recession won’t spare many multinationals, that’s what investors who are liquidating their positions in tech giants seem to think.
letter( (GOOGL) – Get the Alphabet Inc. report), Google’s parent company, seems to have proven them right. The Mountain View, California-based company is bracing for tough times. In fact, CEO Sundar Pichai just warned employees that the company may not be immune to a potential recession.
“The uncertain global economic outlook has always been a top consideration,” Pichai said in an internal memo reviewed by TheStreet and confirmed by a spokesman. “Like all companies, we are not immune to economic headwinds. What I cherish about our culture is that we never see these types of challenges as obstacles. Instead, we see them as opportunities to deepen our focus and invest in the long-term of.”
For example, the internet giant and its subsidiary Youtube could be affected by reduced advertising and marketing budgets by companies seeking to cut costs in response to falling consumer and household spending.
To avoid any unpleasant surprises, especially to avoid a sharp economic slowdown, Google will take precautions to control its own costs. The internet giant will slow hiring for the rest of the year in light of a potential recession.
Google will slow hiring
“We will slow down our hiring for the remainder of the year while still supporting our most important opportunities. For the remainder of 2022 and 2023, we will focus our hiring on engineering, technology and other key roles and allow Ensuring that the great people we hire are aligned with our long-term priorities,” Pichai announced.
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The CEO added that Google needs to be “more entrepreneurial, working with greater urgency, focus and hunger than we can on a sunny day.”
“In some cases, this means consolidating where investments overlap and streamlining processes. In other cases, it means pausing development and redeploying resources to higher priority areas. Improving company efficiency is up to us Everyone – we will create more ways for everyone to participate and share ideas to help, so stay tuned.”
In the past, Google has generally been relatively immune to recessions that have affected the tech industry. You have to go back to the financial crisis to observe the suspension of hiring at the internet giant. But since then, Google has continued to hire. The company had 163,906 employees as of March 31, up 17.1 percent from a year earlier, according to filings with the U.S. Securities and Exchange Commission (SEC).
Google isn’t the only tech giant worried about the impact of a potential recession. On June 30, Mark Zuckerberg, CEO of social media giant Meta Platforms (META) – Get Meta Platforms Inc. Reports), he said he expected “one of the deepest recessions we’ve seen in recent history.”
Therefore, Meta will emphasize its cost reduction policy. According to Reuters, the company only plans to hire 6,000 to 7,000 new engineers in 2022, after an initial project of 10,000 new hires. So it’s a 30% to 40% revision.
Software giant Microsoft ( (MSFT) – Get Microsoft Corporation Reports) has also hedged against an economic slowdown by cutting the number of employees it employs. Before a new role can be offered, employees need permission from the team led by Rajesh Jha, executive vice president responsible for Office and some Windows. Fewer employees will be hired to work in the Windows, Office and Teams chat and conferencing software groups.