- Google said it’s paring some of its famous employee perks to save money and focus on AI investments.
- CFO Ruth Porat said some office equipment will be replaced less frequently and cafe hours will be cut.
- Read the memo obtained by Insider below.
Google is continuing its effort to cut back on spending in 2023. On Friday, CFO Ruth Porat announced to employees that Google would pare back some of its famous employee perks.
In a memo seen by Insider, Porat told staff that the company planned to close some office cafes during slow periods and shift around fitness classes and shuttle schedules. The company will also replace equipment it provides to employees, like new computers, less frequently.
Porat said the company’s efforts to pare back expenses were “particularly vital because of our recent growth, the challenging economic environment, and our incredible investment opportunities to drive technology forward — particularly in AI.”
The move comes a little more than two months after Google announced it would lay off 12,000 workers, citing slowing economic conditions.
The memo, obtained by Insider, was signed by a handful of group leaders, including Porat and Prabhakar Raghavan, Google’s search lead. Google didn’t comment.
Here’s the memo in full:
This year, one of our important company OKRs is to deliver durable savings through improved velocity and efficiency. All PAs and Functions are working towards this. Googlers have asked for more detail so we’re sharing more information below. 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.
We’ve been here before. 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 budgets, cafes, MicroKitchens and mobile phone usage, and removed the hybrid vehicle subsidy. Since then, we’ve continued to rebalance based on data about how programs and services are being used.
How we’re approaching this
The hardest decision we’ve had to make as a company is to reduce our workforce, and that is still being worked through in some countries. Most of the other large changes and savings won’t be visible to most Googlers but will make a noticeable difference to our costs — think innovation in machine utilization for AI computing and reduced fragmentation of our tech stack. These are big, multi-year efforts. A few examples:
- We are focused on distributing our compute workloads even more efficiently, getting more out of our servers and data centers. We’ve already made progress with these efforts and will continue to drive efficiencies — this work adds up given infrastructure is one of our largest areas of investment.
- As we apply our efficient and well-tuned infrastructure and software to ML, we’re continuing to discover more scalable and efficient ways to train and serve models.
- Improving external procurement is another area where data suggests significant savings — on everything from software to equipment to professional services. As one part of this, we’re piloting an improved buying hub that helps teams find suppliers that we’ve negotiated great rates with.
- There are other areas we’ve spoken about that will make a big difference: we’re continuing to redeploy teams to higher priority work, to maintain a slower pace of hiring, to be responsible about our T&E spending, and to implement numerous suggestions from the Simplicity Sprint to improve our execution and increase our velocity — particularly on prioritization, training, launch and business processes, internal tools and meeting spaces.
Changes to programs and services
We want to be upfront that there are also areas where we’ll realize savings that will impact some services Googlers use at work and beyond.
We set a high bar for industry-leading perks, benefits and office amenities, and will continue that into the future. However, some programs need to evolve for how Google works today. As well as helping to bring down costs, these changes will reduce food waste and be better for the environment:
- We’re adjusting our office services to the new hybrid workweek. Cafes, MicroKitchens and other facilities will be tailored to better match how and when they are being used. Decisions will be based on data. For example, where a cafe is seeing a significantly lower volume of use on certain days, we’ll close it on those days and put more focus instead on popular options that are close by. Similarly, we’ll consolidate MicroKitchens in buildings where we’re seeing more waste than value. We’ll also shift some fitness classes and shuttle schedules based on how they’re being used. More info here.
- We’ve also assessed the equipment we provide Googlers. Today’s devices have a much longer lifespan and greater performance and reliability, so we have made changes to what’s available and how often it’s replaced — while making sure that people have what they need to perform their role. Because equipment is a significant expense for a company of our size, we’ll be able to save meaningfully here. You can learn more about these changes at go/distro.
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. We will let Googlers know of any other changes that directly impact services they use.
Our opportunities as a company are enormous. We have clear OKRs and substantial resources at our disposal to pursue them, but these resources are finite. Focusing on using them effectively makes a huge difference.
Jen, Philipp, Prabhakar, Ruth and Thomas (co-owners of the OKR), on behalf of all PA and Functional leads