Alphabet to cut down headcount growth by a half in fourth quarter

Sundar Pichai is the CEO of Google-parent Alphabet.

Alphabet chief executive Sundar Pichai said on October 25 that they plan to moderate their pace of hiring in Q4 of 2022 and the forthcoming year 2023 as the company's Q3 revenue grew at its slowest pace in more than two years, indicating a continued slowdown of the online advertising market.

"We're sharpening our focus on a clear set of product and business priorities. Our Q4 headcount additions will be significantly lower than Q3. And as we plan for 2023, we’ll continue to make important trade-offs where needed and are focused on moderating operating expense growth," Pichai said during the company's earnings conference call on October 25.

Google parent Alphabet stated it added 12,765 people in Q3, including 2,600 people as part of its Mandiant acquisition, to take its total employee base to 186,779 people across the world.

Alphabet CFO Ruth Porat said during the call that the "headcount additions (in Q4) will slow to less than half the number added in Q3". However, they will continue hiring "for critical roles, particularly focused on top engineering and technical talent".

Pichai mentioned that they have begun a push to drive efficiency by realigning resources to invest in their "biggest growth opportunities" and shifting away from several lower priority efforts in the past quarter. This includes shuttering its game streaming service Stadia and canceling its next Pixelbook laptop, besides dissolving the team building the device.

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"Talent is the most precious resource, so we are constantly working to make sure everyone we’ve brought in is working on the most important things as a company. We are reviewing projects at all scales pretty granularly to make sure we have the right plans there, the right resourcing and making course corrections. It is something we’ll continue doing going into 2023 as well," Pichai said.

He mentioned that they will continue to "invest responsibly for the long term in a way that is responsive to the current economic environment".

Alphabet reported a net income of $13.9 billion for the quarter, registering a 26.5 percent decline from $18.9 billion from a year-ago quarter.

Revenues saw a 6 percent increase to $69.1 billion for the quarter, a notable slowdown against a 41 percent growth a year earlier as advertisers pulled back spending in certain areas such as financial services including insurance, loan, mortgage and cryptocurrencies.

Video sharing platform YouTube also witnessed a drop in its advertising revenue to $7.07 billion for the quarter, from $7.2 billion in the same quarter last year, marking its first decline since the tech giant started disclosing the platform's financial performance in 2020.

Google's search revenues increased by 4 percent year-over-year to $39.5 billion, led by travel and retail categories while the overall advertising business rose to $54.5 billion, a 2.5 percent increase year-over-year.