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Google tightens screw on staff expenses as economy slows

Will somebody think of the poor shareholders? They have kids too

Google is joining the legions of other tech companies that are tightening up on company expenses in preparation for a potentially bumpier ride ahead in the global economy.

In an email to senior managers sent last week – seen by The Information – Google's overlords urged divisional bosses to restrict travel to "business critical" events only.

A "high bar" would be set for what is considered essential, the missive added, meaning social functions, full-team offsite meetings and attending events in-person rather than a virtual option are off the agenda for now.

In a statement, Google said execs had "recently shared guidance about taking a responsible approach on expense management, including travel and events. Different Product Area and functions are implementing this is a way that work best for their teams, given their business needs."

Google, like other tech giants, is known for the fringe benefits it dangles in front of the workforce, including free meals in staff canteens, resident gyms, massage therapy, and more but it looks like the relative freewheeling is tightening.

The effort to clip expenses comes amid rising global inflation that is forcing a slowdown in consumer spending, geopolitical tensions, and other factors that are leading to unpredictability about what the next year brings.

Just yesterday, we reported that Google CEO Sundar Pichai said he feels "uncertain" about the economy: "The macroeconomic performance is correlated to ad spend, consumer spend and so on."

He told the Code Conference in Los Angeles that he wants the workforce to up productivity by 20 percent by "simplifying" an organization which has become "slower to make decisions." It launched an initiative, Simplicity Sprint, last month to get ideas from staff on areas to improve.

Google's headcount increased from almost 119,000 staff in 2019 to around 174,000 this year. The company slowed the rate of recruitment earlier in the summer, in line with many other tech giants including Cisco, Intel, and others.

The pandemic buoyed big tech , helping companies grow at healthy double digits as the world turned to technology to work, learn, and play. Google grew revenues 41 percent in 2021 to $257.6 billion, but slowed to 23 percent growth in calendar Q1 of this year, and 14 percent in Q2. ®

Arch rival Microsoft has similarly asked its staff to be mindful of overheads, including biz travel, external training sessions and company get togethers. CFO Amy Hood told them to think twice before submitting company expenses.

CEO Satya Nadella said during its recent earnings call for the close of Microsoft's fiscal 2022 ended 30 June: "Coming out of the pandemic, we are seeing actually a lot of constraints in the economy and the only resource, as I said in my remarks, that can help drive productivity while keeping costs down is digital tech." ®

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