[Real Beat] Google "Office attendance twice a week, desks shared"... Moving to reduce costs

Promoting Space Efficiency in Conjunction with Hybrid Work System

Editor's Note[Jjinbit] is a shortened form of 'Jung Hyunjin's Business Trend' and 'Real Business Trend,' a segment that showcases trends in changes in work.

[Asia Economy Reporter Jung Hyunjin] Google, focusing on cost reduction, has instructed some employees to share desks with other employees. This measure aims to reduce office space costs in a hybrid work environment that mixes remote work and office attendance, as employees are reluctant to return to the office.

On the 22nd (local time), CNBC reported this citing materials shared with internal Google employees. The company relaxed the previous requirement of coming to the office three days a week to two days a week and instructed employees to use the same desk on alternating days when they do not come to the office. For example, an employee who comes to the office on Monday and Wednesday would share a desk with an employee who comes on Tuesday and Thursday.

[Image source=Reuters Yonhap News]

This desk-sharing system named 'Cloud Office Evolution (CLOE)' applies to employees in the cloud division. The target employees include 200 to 300 cloud division employees and partner employees from other departments such as finance and human resources operations. They will form 'neighborhood' relationships, and a staff member will be assigned to manage these neighborhood relationships separately.

Google explained in the notice, "Most Googlers will share desks with other Googlers," adding, "Through the matching process, we will reach an agreement on the basic desk condition and set usage standards with desk sharers to ensure a positive experience in the new shared environment."

If an employee unexpectedly needs to come to the office, they will sit in a pre-arranged free seating area.

Google's introduction of the CLOE system is interpreted as a strategy to optimize office space and reduce costs during the adoption of hybrid work. Google management cited 'real estate efficiency' as the reason for this measure. They also stated that this is not a short-term measure but a fundamental step to use space more efficiently.

This system will be implemented in five U.S. locations: Kirkland, Washington; New York; San Francisco; Seattle; and Sunnyvale, California. Google mentioned in its Q4 earnings report last year that it could incur $500 million in costs related to office space reduction in Q1 this year. CNBC reported that no specific decisions have been made yet regarding which office spaces will be reduced.

CNBC pointed out, "The cloud division accounts for more than a quarter of full-time employees and is growing rapidly, but profitability is poor." Google's cloud revenue in Q4 last year was $7.32 billion, a 32% increase year-over-year, but it fell short of market expectations. In terms of net income, it has recorded losses of hundreds of millions of dollars each quarter.

Earlier, Sundar Pichai, CEO of Google's parent company Alphabet, announced in September last year that the company would improve efficiency by 20% compared to now. Subsequently, in January this year, the company announced it would cut 12,000 jobs.