Tech expert explains how Google layoffs will impact Silicon Valley and beyond

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Sunday, January 22, 2023
Tech expert explains how Google layoffs will impact Silicon Valley
Bay Area tech expert Ahmed Banafa explains how Google layoffs will impact Silicon Valley and beyond.

SILICON VALLEY, Calif. (KGO) -- Thousands of tech employees, who were wondering if they might be the next for layoffs in the industry, learned their fate Friday.

Google's parent company said it would cut its staff by 6% in its largest-ever round of layoffs.

Once sitting atop of the financial mountain during the pandemic, tech companies are feeling the effects of a return to normalcy.

The bottom line for giants like Meta, Microsoft and now Google is forcing employees to feel the heat.

MORE: Layoff tracker: Mass layoffs by tech companies big and small hit the Bay Area

"The revenue is not justifying the amount that we have," SJSU Professor and Tech Expert Ahmed Banafa said. "This is why you heard at the end of 2022, this talk about how, 'you have to work hard, we're going to evaluate people.' The minute you hear something like this is an indication when the company is looking very carefully at the bottom line and trying to cut costs."

And Banafa says those cuts start with employees, like we saw Friday at Google.

"I have a lot of friends that work at Google, so I'm really worried about them," Banafa said. "I'm afraid to call them."

MORE: Google-parent Alphabet to cut 12K jobs from global workforce

Twelve thousand employees from Google's parent company Alphabet join the other tens of thousands recently cut from companies across Silicon Valley as they weigh budget decisions for 2023.

This comes just a matter of months removed from the tech sector hiring 200,000 plus employees, more than double what we saw in the previous decade according to Banafa.

"During the pandemic, Google increased the number of employees by about 30%. What they're doing is, they're doing what I call, 'the great reset'," Banafa said. "They're going to go back to the 2019 era. And even with the cuts we have, we're not even close to that. We're still above that level."

Banafa says these cuts have a trickle-down effect because thousands of employees now have less money to spend, leading to cuts in other industries. But this is not permanent.

MORE: Tech layoffs 2023: Companies that have made cuts

Employees are being hired back at other tech companies or in other tech roles in non-tech companies.

So this may be a temporary downswing, but Banafa says this isn't 2008 or the "Dot Com, Dot Gone" era and it won't slow down the prominence of Silicon Valley.

"We have hundreds and hundreds of companies in Silicon Valley and Silicon Valley has never been defined by one company," Banafa said. "It's just defined by the product and the innovation."

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