Google’s decision to lay off hundreds of U.S. employees in favor of cheaper international alternatives and AI is likely to spark further headcount reductions.

The company, owned by Alphabet, made the decision ahead of a quarterly earnings call. The findings from that call had been incredibly positive, boosting the stock value and the sale of Google technology and devices globally.

Google Core Team

The Core Team bore the brunt of this decision, meaning two hundred staff were shown the exit door. A quarter of the people laid off this way came from the Google Sunnyvale, California campus.

This team was responsible for the bread-and-butter building blocks. Such as Google’s infrastructure, securities, and information technology.

A CBS report further detailed the job cuts and the potential impact on the U.S. jobs market and economy.

Asim Husain, vice president of Google Developer Ecosystem, emailed staff, saying, “We intend to maintain our current global footprint while also expanding in high-growth global workforce locations so that we can operate closer to our partners and developer communities.” This shift in strategy could have significant implications for the job market and economy, a fact that should not be overlooked.

Google I/O, the company’s annual developer conference, is on the horizon for May 16. The conference will unveil the company’s outlook and new products. It is a major milestone for investors looking at the year ahead in tech and where Google will be staking its chips.

“Recent advances in Generative AI across the industry, including Google’s Gemini, are changing the very nature of software development as we know it,” said Husain.

This emphasis on AI could be a telling sign. It shows that Google is confident enough to outsource work and reduce the headcount, as they are heavily banking on the potential of this technology.

It remains to be seen if Huain’s confidence reflects the market outlook once the conference and this financial year are concluded.

One thing is for sure: Google can’t reverse this move ahead of the jobs report, which we earmarked as a huge indicator of the Fed’s outlook for growth and tax rates.

Image: Ideogram.