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Comment by Salgat | Hacker News Reader

I don't understand why Google and Amazon would invest all this money in these employees building up their tech and tribal knowledge just to lay them off. Do these companies not expect to grow in the future? Seems like just freezing hiring for a year or two would save you more money in the long run rather than having to rehire and rebuild all this expertise.

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> Seems like just freezing hiring for a year or two would save you more money in the long run rather than having to rehire and rebuild all this expertise.

It took Google 6 years from 2012 to double headcount.

In that time, revenue went from $50B to $136B (almost triple). Profit from $10.7B to $30.7B (triple).

In 4 years from 2018 to 2022, Google more than doubled headcount.

In that time, revenue went from $136B to $279B (barely double). Profit from $30.7B to $50.9B (only up 65%).

Almost all these companies have similar stories.

They're still good companies. They just hired way too many people thinking that the pandemic trend would continue for a long period of time - rather than revert to the mean.

If Google continue to grow at it's more long-term average rate - without the layoffs, you're looking at being overstaffed for years.

Why?

Because the recruiting process can cost over a year's salary, and that's ignoring the time it takes to get up to the same productivity as other employees once they start.

A lot of people even at Google just do run-of-the-mill stuff. Not everyone is making deep learning artificial big table or some such.

A rule of thumb is at any organization roughly square root of employees are critical. So at Google that number would be < 500 people. So even when I consider that layoffs are totally random (unlikely), there would be 40 or so people laid off which could be considered important loss. This is bad but not going to hamper Google significantly where they are going.

I haven't heard the "square root of employees are critical" rule of thumb. I have previously heard of Price's Law - paraphrasing: "half of the output is created by a square root of the organization". But as I understand it, there's not a notion of criticality. What if 80% of your output is critical? What if the n-n^0.5 group is on critical output and your square root group is slinging schlock at high volume?

Sometimes, you'll hear pundits say that these kinds of layoffs are aimed at "the bottom 5%" or whatever, but who's been around for these cycles knows that lots of good people get cut alongside the actual underperformers. There's also a lot of "last to be hired, first to be fired" in big layoffs, so presumably with those people you aren't losing too much tribal knowledge.

In some cases, the layoffs were targeted at particular areas of the company, like Amazon targeting their devices group. If they don't anticipate growth in that area, it may not be worth it (to management, anyways) to reallocate those employees to other parts of the company.

All that being said, these things tend to be driven by short-term financial metrics rather than long-term ones. A hiring freeze wouldn't have as dramatic an impact on next quarter's earnings.

> by short-term financial metrics rather than long-term ones. A hiring freeze wouldn't have as dramatic an impact on next quarter's earnings.

In the most recent quarter, Google’s profit was down 34% and it was the fourth consecutive quarter with decrease in profits. How many quarters do you think they should wait out before trying to stem the tide of costs outpacing revenues?

https://www.nytimes.com/2023/02/02/technology/alphabet-earni...

We are all docker containers running on a kubernetes cluster. Can be upscaled or downscaled as needed.

That's a horrible analogy since it assumes that a brand new hire is instantly as productive as any other employee.

That's not an analogy. It's a polemic.

> Do these companies not expect to grow in the future?

Yes and wages were outpacing that growth, so as soon as someone took the first step, all the big tech companies piled on in short order. And, low and beyond, offers appear to be down right now. Mission accomplished?

On hiring outpaced need for employees or ROI

COVID era was a hiring boom. Most of the companies I saw doing layoffs still have significantly larger employment numbers than pre-COVID.

Unfortunately the market does not work on a year or two timelines.

These companies still have more employees than just before the pandemic.

There is a concept of internal layoff to invent, where a part of the workforce as to apply to a different teams, being fired from the previous one and hire by the next one.

For the anecdote, i know someone that was let go by IBM and hire by RedHat the same month two years ago.

“1 or 2 years?? Are you planning on living for ever??? That’s like 4 to 8 quarters!”

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