A major investor in Google has written to its owner claiming its employees are overpaid and that the company’s workforce should be drastically reduced.

Sir Christopher Hohn’s hedge fund TCI, based in London, has been a significant investor in the company since 2017 and has a $6 billion (£5.1 billion) stake, according to a letter sent to Sundar Pichai, the company’s CEO.

TCI is urging Google to follow the cost-cutting measures implemented by major tech rivals such as Facebook’s parent company, Meta, Amazon, and Microsoft.

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In a letter made public on Tuesday, November 15, Hohn, managing director at TCI, said: “We are writing to express our view that the cost base of Alphabet is too high and that management needs to take aggressive action.

“The company has too many employees and the cost per employee is too high.”

He said Alphabet, which employed nearly 187,000 people at the end of the third quarter, has more than doubled its workforce since 2017, with headcount increasing at a 20 percent annual rate.

He continued: “This growth is excessive, both in relation to historic headcount growth and what the business requires. Our conversations with former executives of Alphabet suggest that the business could be operated more effectively with significantly fewer employees.”

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The four-page letter also criticizes pay, claiming that Alphabet pays its employees “some of the highest salaries in Silicon Valley.”

According to filings with the Securities and Exchange Commission (SEC), the average salary for an Alphabet employee last year was $295,884, according to the letter.

According to S&P Global, this was 67 percent higher than Alphabet’s rival Microsoft and 153 percent higher than the 20 largest technology companies in the US.

“There is no justification for this enormous disparity,” said Hohn, who added that computer scientists and engineers who can command top pay packets represent only a “fraction” of the employee base.

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“Many employees are performing general sales, marketing and administration jobs, who should be compensated in line with other technology companies.”

The call for cost-cutting measures comes as Silicon Valley companies face pressure from a slowing global economy and revenue streams such as advertising.

Last week, Mark Zuckerberg’s Meta, the parent company of Facebook, Instagram, and WhatsApp, laid off 11,000 employees in the company’s history.

On Monday, November 14, reports surfaced that Amazon was planning to lay off up to 10,000 employees in corporate and technology roles, the company’s largest layoffs to date.

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Hohn’s letter also calls on Alphabet to scale back by at least half the huge annual losses being incurred by its “Other Bets” business, which TCI says has made $3bn in revenues but $20bn in operating losses over the last five years.

TCI identified Waymo, the self-driving car experiment that has been the division’s biggest source of losses, as an area for reduction.

TCI also called on Alphabet to increase its already substantial share repurchase programme to run down its $116bn of cash, given that large-scale mergers and acquisitions are limited owing to regulatory scrutiny.

Source: The Guardian

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