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>Google CEO says he hopes to make company 20% more efficient The 20% number makes sense: According to their latest Quarterly Report, Google's Q2 2022 profit w

by jmoak3 4y ago

>Google CEO says he hopes to make company 20% more efficient The 20% number makes sense: According to their latest Quarterly Report, Google's Q2 2022 profit was identical to Google's Q2 2021 profit, yet the company increased headcount by roughly 20%. This means profit per employee is down ~17%. Page 2 of https://abc.xyz/investor/static/pdf/2022Q2_alphabet_earnings_release.pdf https://abc.xyz/investor/static/pdf/2022Q2_alphabet_earnings... has both number of employees and quarterly profit for each quarter. This is also likely why Sundar keeps saying "There are real concerns that our productivity as a whole is not where it needs to be for the head count we have" - https://www.cnbc.com/2022/07/31/google-ceo-to-employees-productivity-and-focus-must-improve.html https://www.cnbc.com/2022/07/31/google-ceo-to-employees-prod... EDIT: Added more links and notes EDIT2: Math

xtracto 4y ago
Ooof, will they be letting go 20,000-30,000 employees? Sounds scary.
- jmoak3 4y ago
  I don't think so, but to close that profit-per-employee gap they'll have to find ways to get profit up, while likely letting normal resignation/performance churn trim the count.
- monkeydust 4y ago
  Yea I cant see that happening. 20% productivity doesn't mean cutting 20% of heads.
wollsmoth 4y ago
But why go on such a hiring spree this year??
onlyrealcuzzo 4y ago
Google OpEx for 2022 was ~$180B [1]. IIUC, salaries are ~$20B - total R&D spending is ~$31B [2]. However, at least some software developer expenses are counted in Costs of Revenue [3]. Unless my numbers are wrong - it appears cutting OpEx by 20% would be hard to achieve by cutting headcount. [1] https://www.macrotrends.net/stocks/charts/GOOG/alphabet/operating-expenses https://www.macrotrends.net/stocks/charts/GOOG/alphabet/oper... [2] https://www.statista.com/statistics/507858/alphabet-google-rd-costs/ https://www.statista.com/statistics/507858/alphabet-google-r... [3] https://www.sec.gov/Archives/edgar/data/0001652044/000165204422000029/goog-20220331.htm https://www.sec.gov/Archives/edgar/data/0001652044/000165204...
- jmoak3 4y ago
  To return to Q2 2021's Profit-Per-Employee they wouldn't need to cut OpEx by 20%, just increase profit by 20%. >it appears cutting OpEx by 20% would be hard to achieve by cutting headcount. Cutting OpEx by 20% isn't what I suggested the problem is. If it were, that would increase Profit-Per-Employee way past Sundar's goal: If they cut an OpEx of 180b (let's say 45b per quarter) by 20%, their profit would grow by much more than 20%. 0.2 * 45 = 9b while profit was 20b for Q2 2021 and 2022. Saving that 9b would increase profit by 45%. EDIT: Oh, unless you're suggesting Sundar is saying he wants to cut OpEx by 20% in article, in which case I agree with your assessment. However I didn't suggest Google should try to fire 20% of people, that would probably make things much worse. When Sundar says 20% more efficient, I'm interpreting that he wants that Profit-Per-Employee ratio to go back to where it was Q2 2021.
  - gowld 4y ago
    > Profit-Per-Employee Employees are only one kind of expense. Why does Profit-Per-Employee matter?

by jmoak3 4y ago

xtracto 4y ago

Ooof, will they be letting go 20,000-30,000 employees? Sounds scary.

jmoak3 4y ago
I don't think so, but to close that profit-per-employee gap they'll have to find ways to get profit up, while likely letting normal resignation/performance churn trim the count.
monkeydust 4y ago
Yea I cant see that happening. 20% productivity doesn't mean cutting 20% of heads.

wollsmoth 4y ago

But why go on such a hiring spree this year??

onlyrealcuzzo 4y ago

Google OpEx for 2022 was ~$180B [1]. IIUC, salaries are ~$20B - total R&D spending is ~$31B [2]. However, at least some software developer expenses are counted in Costs of Revenue [3]. Unless my numbers are wrong - it appears cutting OpEx by 20% would be hard to achieve by cutting headcount. [1] https://www.macrotrends.net/stocks/charts/GOOG/alphabet/operating-expenses https://www.macrotrends.net/stocks/charts/GOOG/alphabet/oper... [2] https://www.statista.com/statistics/507858/alphabet-google-rd-costs/ https://www.statista.com/statistics/507858/alphabet-google-r... [3] https://www.sec.gov/Archives/edgar/data/0001652044/000165204422000029/goog-20220331.htm https://www.sec.gov/Archives/edgar/data/0001652044/000165204...

jmoak3 4y ago
To return to Q2 2021's Profit-Per-Employee they wouldn't need to cut OpEx by 20%, just increase profit by 20%. >it appears cutting OpEx by 20% would be hard to achieve by cutting headcount. Cutting OpEx by 20% isn't what I suggested the problem is. If it were, that would increase Profit-Per-Employee way past Sundar's goal: If they cut an OpEx of 180b (let's say 45b per quarter) by 20%, their profit would grow by much more than 20%. 0.2 * 45 = 9b while profit was 20b for Q2 2021 and 2022. Saving that 9b would increase profit by 45%. EDIT: Oh, unless you're suggesting Sundar is saying he wants to cut OpEx by 20% in article, in which case I agree with your assessment. However I didn't suggest Google should try to fire 20% of people, that would probably make things much worse. When Sundar says 20% more efficient, I'm interpreting that he wants that Profit-Per-Employee ratio to go back to where it was Q2 2021.
- gowld 4y ago
  > Profit-Per-Employee Employees are only one kind of expense. Why does Profit-Per-Employee matter?