Alphabet Inc.'s
What Happened: Google's estimate of $700 million in severance costs during the March 2024 quarter is a third of what it spent in the financial year 2023, according to its earnings report.
Google kickstarted 2024 with mysterious layoffs that claimed over 1,000 employees overnight. The layoffs affected Google's hardware as well as software departments, hitting engineers working on Google Assistant, YouTube, and advertising sales.
On the hardware side, Pixel, Nest, and Fitbit employees were impacted, too.
In 2023, Google laid off over 12,000 employees with cuts made across divisions, including Area 120, which works on moonshot projects.
During a post-earnings conference call, Google revealed that it spent $2.1 billion on severance costs for these laid-off employees for the full year 2023.
Why It Matters: Google says it is working to "reengineer" its cost base, which includes consolidating and reorganizing its functional structure. For example, Google said it had consolidated its devices team to bring together employees working on Nest and Fitbit products, driving more resources toward its Pixel team instead.
"Across different teams, we have wound down some non-priority projects, which will help us invest and operate well in our growth areas," said Google CEO Sundar Pichai.
Ruth Porat, Google's CFO, said the company is focused on "organizational efficiency and structure," and one of the ways of achieving this is by "removing layers to simplify execution and drive velocity."
Porat, however, added that Google will "continue to invest in top engineering."
