Google parent Alphabet has laid off 12,000 employees. This decision was purportedly on orders from investors.
This was revealed through a letter that went viral on the internet. The letter was sent by the founder and CEO of The Children's Investment Fund Management (TCI) Christopher Hohn to Alphabet CEO Sundar Pichai.
In a letter sent November 15, 2022, Hohn asked Pichai to furlough Alphabet employees. The billionaire has urged him to emulate the cost-cutting steps of his competitors, such as Meta, Amazon and Microsoft.
"We are writing to express our view that Alphabet's cost base is too high and management needs to take aggressive action. The company has too many employees and costs per employee are too high." he wrote in a letter,
According to Hohn, Alphabet Inc. employed nearly 187,000 staff at the end of the third quarter, having doubled staff numbers since 2017, with headcount growing 20% annually during the period.
"This growth is excessive, both in terms of historical growth in headcount and business needs," said Hohn. "Our conversations with former Alphabet executives show that businesses can be operated more effectively with far fewer employees."
The four-page letter also highlights the issue of salary. According to him Alphabet offers employees "the highest salaries in Silicon Valley".
Last year, the average compensation for a typical Alphabet employee was $295,884 according to filings with the Securities and Exchange Commission (SEC), the letter said. This is 67% higher than Alphabet rival Microsoft and 153% higher than the 20 largest US tech companies, according to analysis by S&P Global.
"There is no justification for this vast difference," said Hohn, who added that the computer scientists and engineers who could command the highest pay packages represent only a "small fraction" of the employee base. "Many employees do general sales, marketing, and administrative work, which should be compensated according to other technology companies."
After two months of that letter, Alphabet finally issued an announcement to lay off 12 thousand of its employees, or around 6% of its total employees worldwide.
"I take full responsibility for the decisions that brought us here," Pichai said in the memo.
Little information, this is not the first time Christopher Hohn has sent a letter to the CEO of Google. In November 2022, TCI Fund Management sent an open letter to the tech giant demanding layoffs to survive the economic downturn.
TCI Fund Management itself is based in London, England, founded by Christopher Hohn in 2003. TCI Fund Management owns 0.27 percent of Alphabet Inc., which is valued at nearly USD 6 billion. The investment firm reportedly began raising stakes in tech firms in 2017.
