Google says it is doubling down on the office.
The Alphabet Inc. GOOG -1.39% unit said it would spend $7 billion this year on expanding its footprint of offices and data centers across the U.S., including pouring $1 billion into its home state of California. The search-engine giant said it would hire at least 10,000 new full-time staff over the course of the year in anticipation of a post-pandemic recovery in the U.S.
The spending commitment follows a slowdown in investment by Google about a year ago, as the magnitude of the Covid-19 crisis was starting to take shape. Last April, Alphabet and Google Chief Executive Sundar Pichai told staff in a memo that Google would slow hiring amid the pandemic.
Like other big tech companies, Google has flourished over the past year, benefiting from an accelerated shift in online ad spending. Despite that growth, its U.S. investment planned for 2021 is lower than pre-pandemic levels; it invested an annual average of $11 billion in 2018 and 2019.
The company said this year’s investment plan is aimed at existing sites but that it is also creating three new office sites, in Minnesota, Texas and North Carolina, expanding Google’s presence to 19 states. The company said it would add thousands of roles at existing sites in Atlanta, Washington, D.C., Chicago and New York, extending a yearslong push to broaden its footprint beyond Silicon Valley. Alphabet reported more than 135,000 employees world-wide as of last year.
“Coming together in person to collaborate and build community is core to Google’s culture,” Mr. Pichai said in a blog post Thursday. “And it will be an important part of our future.” Google’s announcement comes about a week before Mr. Pichai appears before Congress with the chief executives of Facebook Inc. and Twitter Inc. for a hearing on misinformation on internet platforms.
Google has more than doubled its number of data centers in the U.S. since 2018, reflecting the growing volume of digital information generated by individuals and businesses daily. The company has been investing heavily in its cloud business in recent years as it looks for growth beyond its bread-and-butter advertising income. Last year It began breaking out revenue for its cloud unit, reporting sales rose 46% to $13.08 billion from 2019. Expenses rose over the same period by 51% to $5 billion.
The expansion of data centers by Google and other tech companies typically provides a jolt of construction-related jobs but requires minimal staffing after they are completed. The facilities can be many times the size of a Walmart Supercenter but employ fewer than 100 people to tend to equipment.
Google’s announcement also comes as big companies rethink their office work after a year in which many employees have been working from home. Google was one of the first major U.S. corporations to formally extend the time period for employees to work remotely, deciding last summer that it would keep staff working from home until at least July of this year. As Covid-19 cases stabilize or fall in many places and vaccinations pick up pace, executives are now debating when and how to return to offices.
The search giant now expects employees will return to offices in the fall and plans to allow workers to remotely two days a week. The policy differs slightly from other technology companies such as Twitter and Facebook, which plan to allow more of their employees to continue working remotely after vaccine distribution has expanded.
Other tech companies have been accelerating investments outside of the Bay Area. Having spurred employees to experiment with working remotely from other locations, many have chosen to make those moves permanent. Austin, Texas has been a particular hot spot for tech employment.
Write to Parmy Olson at [email protected] and Tripp Mickle at [email protected]
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