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What might compensation shifts mean for channel partners?

Kelly Teal

November 22, 2022

3 Min Read
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Rumor has it that Google Cloud pay will soon change for sales teams — and probably not for the better.

This week, reports – originating with one from New York-led The Information – started circulating that upheaval is afoot. Commissions could shift to how much customers spend, rather than being assessed by total contract value, even when all services did not come from Google Cloud, according to The Information.

Another report says senior Google Cloud sales leaders have told their managers that new compensation approaches will begin next year. And the implication is that those shifts will amount to less, not more.

What that all means for channel partners selling and specializing in Google Cloud remains unclear. SADA, the large, Google Cloud-only managed service provider, declined to comment. So did Google Cloud.

“We don’t comment on Google Cloud’s internal sales or compensation externally,” a spokesperson told Channel Futures on Tuesday.

The purported changes could significantly affect how Google Cloud pays its salespeople. Moreover, that could well trickle down to the indirect channel, especially given co-selling efforts.

Why Adjust Google Cloud Pay for Sales Now?

Reports of Google Cloud pay modifications come as the cloud computing sector overall experiences pullbacks in growth. What’s odd, though, is that the third quarter of 2022 marked Google Cloud’s perhaps best-ever sales numbers. Those rose 38% compared to the second quarter, to $600 million.

However, Google Cloud and its parent, Alphabet, are leery about the future, just as their peers are. With a recession on the near horizon, the companies have slowed hiring through the rest of 2022. Reports further indicate that managers, including those at Google Cloud, have been told to stack rank and get rid of 10,000 low performers. (Retailer Amazon also is shedding 10,000 jobs, although not widely or necessarily within cloud computing division Amazon Web Services. And the tech sector overall is starting to resemble the early 2000s dotcom bust.) Forbes reports that part of the impetus comes not just from the economy, but also pressure from a hedge fund.

“Christopher Hohn, a U.K. billionaire activist investor, wrote a letter to Alphabet, the parent company of Google, asserting that its employees are paid too much compared to other tech giants and its bloated workforce needs to be cut down,” according to the site.

One of the reasons Google – and Google Cloud – compensates well, however, is to motivate employees to stay at the company. That way, experts don’t defect to rivals and share, inadvertently or not, trade secrets or launch startups that would eat into market share.

Eliminating value-based commissions could well push staff to leave Google Cloud, denting the gains the world’s third-largest public cloud computing provider has made in the past couple of years. Consider that sales teams were paid for billion-dollar deals with Deutsche Bank and Sabre on the existing structure, rather than the likely new one.

Probable Google Cloud pay changes further call into question how MSPs such as SADA, which has committed to bringing in $2.5 billion in Google Cloud sales through 2025, might profit. And for now, there is no direct answer.

Want to contact the author directly about this story? Have ideas for a follow-up article? Email Kelly Teal or connect with her on LinkedIn.

 

About the Author(s)

Kelly Teal

Contributing Editor, Channel Futures

Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.

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