May 27, 2023
When Google cost cutting goes molecular: Staples and more • The Register
Google's beancounters are hunting down ways to satisfy corporate expense bill
Google's beancounters are hunting down ways to satisfy corporate expense bill reductions, with many staff asked to sweat PC assets and some noting things like availability of staples and sticky tape becoming more limited.
In an email to Googlers, Ruth Porat, the chief financial officer at the ad search and cloud biz, described "multi-year efforts" to push through "durable savings," according to a series of internal documents seen by CNBC.
"This work is particularly vital because of our recent growth, the challenging economic environment, and our incredible investment opportunities to drive technology forward – particularly in AI," she added.
Google parent Alphabet confirmed in January that globally it was erasing 12,000 employees from the payroll, following a period of heavy recruitment during the pandemic when headcount went from 120,000 in Q1 2020 to more than 186,000 in September last year. Microsoft, Amazon and others have taken similar action.
CEO Sundar Pichai told staff at the time the company hired for a "different economic reality than the one we face today." Google's sales growth has slowed in recent quarters, and in Q4 it reported a 1 percent rise in revenue to $76.04 billion and a 34 percent year-on-year fall in net profit to $13.62 billion.
For 2022 as a whole, the group booked a 10 percent rise in turnover to $282.83 billion, and hauled in net income of $59.97 billion versus $76.03 billion in the prior year. Total costs and expenses were $207.9 billion.
"We've been here before," Porat said in her email. "Back in 2008, our expenses were growing faster than our revenue. We improved machine utilization, narrowed our real estate investments, tightened our belt on T&E (travel and entertainment) budgets, cafes, micro kitchen and mobile phone usage, and removed the hybrid vehicle subsidy."
"Just as we did in 2008, we'll be looking at data to identify other areas of spending that aren't as effective as they should be, or that don't scale at our size," the CFO added.
One area to be beaten by the cost-cutting stick is portable and desktop-based PC and monitors. Googlers are putting refreshes on hold, and the document says that staff outside of engineering that need a new laptop will get a Chromebook by default, not the range of machines – including shiny Apple MacBooks – that were once open to them.
This might prove a nice shot in arm for Chromebook sales, which started to decline in autumn 2021 following a buying frenzy in education.
In a related document, Google says this move "also provides the best opportunity across all our managed devices to prevent external compromise," which is one way to spin the change in how kit is replaced. With respect to mobile phones, buying handsets that cost more than $1,000 will need at least director level approval. CloudTop will be the "default desktop" for staff.
"We set a high bar for industry-leading perks, benefits and office amenities, and we will continue that into the future," said Porat. "However, some programs need to evolve for how Google works today."
The programs for food, gym, massage and transportation were built for a world when employees came into the office every day but that has changed since the pandemic. Google even introduced a desk sharing scheme – currently only for US-based Google Cloud employees – in February as the company consolidates some real estate.
In a document, Google said: "Now that most of us are in three days a week, we noticed our supply/demand ratios are a bit out of sync: We’ve baked too many muffins on a Monday, seen gBuses [Google's campus shuttle buses] run with just one passenger, and offered yoga classes on a Friday afternoon where folk are more likely to be working from home."
As a result, some cafes may close on Mondays and Fridays, as they are under-used.
Perhaps channeling its inner-Capita – a UK tech biz known for penny pinching – Google will no longer provide staples and sticky tape at print stations in offices. This is "part of a cost effectiveness initiative," said another company document.
In a statement sent to The Register, Google said: "As we've publicly stated, we have a company goal to make durable savings through improved velocity and efficiency. As part of this, we're making some practical changes to help us remain responsible stewards of our resources while continuing to offer industry-leading perks, benefits, and amenities." ®
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