Google institutional investor calls for wider cuts: 30k jobs
TCI Fund run by Brit billionaire Chris Hohn also wants ad biz to slash salaries
The billionaire hedge fund manager who runs a major Google investor isn't satisfied with the record 12,000 redundancies the US tech giant is making, and wants to see thousands more forced out of the organization.
Estimated to be worth around $8 billion, Sir Christopher Hohn reportedly paid himself £1.5 million ($1.8 million) a day last year and is the boss of The Children's Investment Fund. He had already agitated for change in November when he implored Google execs to cut costs by reducing headcount, paying staff less, and killing off profitless business.
Whether Google listened to TCI Fund or not is a moot point, but Sundar Pichai last week confirmed that 12,000 of its employees were to be booted because it hired heavily during the pandemic for a "different economic reality to the one we face today." Yesterday, he told a town hall meeting of Googlers that not hiring risked losing business.
Google's workforce went from 120,000 in 2020 to nearly 187,000 at the end of September, and it is now under pressure due to slowing sales and shrinking profits. Hohn at TCI now wants to see even more dramatic action taken by senior management.
"Over the last five years, [Google parent] Alphabet has more than doubled its headcount, adding over 100,000 employees, of which over 30,000 were added in the first nine months of 2022 alone," he said in the latest letter to Pichai [PDF].
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He described the recent decision to chop thousands as a "step in the right direction" yet claimed it did not reverse the personnel numbers grown in 2022. "Ultimately, management will need to go further," said Hohn.
"I believe management should aim to reduce headcount to around 150,000, which is in line with Alphabet's headcount at the end of 2021. This would require a total headcount reduction in the order of 20 percent," he added.
At the same time, Google should address another bugbear of his: "excessive employee compensation." In November, TCI claimed Googlers were paid 67 percent more than Microsofties, and 152 percent higher than the 20 largest tech companies in the US.
"The median salary at Alphabet in 2021 amounted to nearly $300,000, and the average salary is much higher. Competition for talent in the technology industry has fallen significantly allowing Alphabet to materially reduce compensation per employee," Hohn added.
The hedge fund manager, who said he know it is "never easy to let people go," added that he hoped to have further dialog with Google. TCI owns a $6 billion stake in Google, equating to 0.27 percent shareholding, putting it just outside of the top 20 Google stock owners.
We have asked Google to comment. ®