The Strategist

Google downsizes Cloud Services department to compete with Amazon and Microsoft

02/25/2020 - 09:34

Google intends to compete in the cloud services market. To do this, the company is literally “shaking up” its cloud division and reducing the number of employees. For more than a year, the direction has been headed by a top manager, whose actions led to tension in the team.

Reducing the employees of the Google cloud division, which the company confirmed last week, is one of the company's steps in an attempt to spur business growth and compete with other market players, including Amazon, Microsoft and Chinese Alibaba. According to the WSJ sources, the division is facing the challenge of becoming one of the two leading suppliers of cloud computing power and breaking the bar of $ 25 million in revenue over the next few years. The implementation of these tasks was entrusted to the service’s Head, Thomas Kurian, who came to the company in November 2018 from Oracle.

Google did not comment on the company’s specific goals. Kurian told the newspaper that the “standings” are not his priority: “I don’t wake up every day thinking about if we are first, second or third. If we make the right innovative products, we will grow and see the result.”

After Kurian joined the company, the atmosphere in the team became tense, WSJ writes. The new leader began to set stricter deadlines for projects, which outraged employees who were not used to such deadlines. In addition, previously engineers were often more involved in projects that they were interested in, rather than those that customers needed, says WSJ. The top manager changed the situation: “We had to create what we can sell. People were unaccustomed to this,” said one of the newspaper’s interlocutors. In addition, Kurian changed the principle of payments to sales staff, reducing fixed salaries but increasing bonuses. Some of the publication’s sources left the company just because of the changes, said WSJ. Google did not comment on this either. The company explained the cuts with restructuring arranged in order to improve customer interaction.

Google has room to grow, now its market share in the cloud business is about 4%, WSj quotes research company Gartner Inc. Kurian has identified six priority areas where Google can become one of the leaders, including finance and health. He is also developing a regional sales network and exploring ways to grow his business in China, former Google employees say. 


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