This is the total amount of money Google has spent on employee layoffs

One prominent justification companies often provide for employee layoffs is cost-cutting, despite the irony that it incurs significant expenses, particularly in the short term. Google, as a case in point, spent billions of dollars on employee severance and related costs, as revealed in the latest quarterly results by Alphabet.

According to the quarterly earnings report, Google incurred a substantial $2.1 billion charge for employee severance and related costs during the extensive layoffs in early 2023. Notably, this figure pertains only to the year 2023. Even as Google announced an additional 1,000 job cuts in the first month of 2024, the company had already spent $700 million on previous layoffs.

The initial round of layoffs, disclosed in January 2023, resulted in approximately 12,000 employees being let go, constituting about 6% of the global workforce. This move, attributed to economic uncertainties and the need for operational streamlining, caused ripples in the tech industry, raising concerns about a broader slowdown in the sector.

The latest earnings report underscores the significant financial impact of these layoffs, with the $2.1 billion charge representing nearly 7% of the company’s net income for the past year. Despite analysts expecting severance costs, the actual figure surpassed predictions, highlighting the human toll of restructuring efforts.

While facing the financial burden of layoffs, Google’s revenue continued to grow, albeit at a slightly slower pace. In the fourth quarter, revenue reached $86.3 billion, marking a 13% year-over-year increase, and the full-year revenue for 2023 surpassed $307.4 billion. However, this growth fell short of analyst expectations, emphasizing the challenges Google confronts in the current economic climate.

Google’s CEO, Sundar Pichai, has indicated that layoffs will persist in 2024, albeit not at the same scale as in 2023. Pichai anticipates that numerous teams will be affected as Google continues its efforts to streamline operations