Google’s cloud division is looking to improve profitability by eliminating workers it feels are no longer central to its operations, according to a report published Friday in the Wall Street Journal.
Google confirmed it will reduce staff as part of “organisational changes to a handful of teams.”
The plan is to improve how the company goes to market and engages partners and customers across industries and geographies, the company said. The “difficult, but necessary” restructuring impacts “a small number of employees.”
Former Oracle president Thomas Kurian, who became Google Cloud CEO at the start of 2019, has been making sweeping organisational changes at the third-largest public cloud provider in his year-long tenure. Most of those have involved hiring new employees, especially in its go-to-market organisation.
Last year, Kurian said Google Cloud would triple its sales force over the new few years as it focuses on an enterprise push targeting the public sector, financial services, retail, healthcare, manufacturing, and gaming, media and telco.
Last week during a fourth-quarter earnings call, Alphabet CFO Ruth Porat said the parent company’s most-sizable headcount increases again came in Google Cloud for both technical and sales roles, which included workers who came in through the acquisition of Looker.
But there’s significant pressure on Kurian to ramp profitability and advance Google’s public cloud market share, according to a report published in December by The Information.
According to that technology news site, Alphabet’s leadership briefly considered leaving the cloud infrastructure market in 2018 due to concerns over profitability. While they ultimately opted to invest in a buildout of its infrastructure footprint, long-term funding looks contingent on Google Cloud leapfrogging Microsoft in market share within a few years.
There's talk in the ranks that failure to meet the 2023 goal will result in funding being pulled from the expensive endeavor, The Information reported.
Google did not comment on which employees are affected by the latest restructuring, but said it is trying to help them find new positions at the company.
One Google Cloud reseller told CRN USA that Google had taken on new teams through acquisitions that weren’t doing “critical work”—some of them in the organisation of Kevin Ichhpurani, Google Cloud's global ecosystem vice president.
A lot of people were let go, that source said, which was difficult for them personally. But Kurian recognised that their roles were no longer necessary.
In the fourth-quarter earnings statement, Google for the first time broke out its cloud financials. The division—including Google Cloud Platform and G Suite productivity tools—is close to achieving a US$10.5 billion annual revenue run rate, the company reported.