Even Google Feels The Economic Crunch

Sometimes it seems that search-engine giant Google is invincible. The company has recently launched the Android OS for the G1, it continues to dominate the Web advertising market and it seems that they launch a new product every other week that has everyone on the Web fawning over them.

But Google is, after all, a business and isn't immune to the downturn the economy has seen over the past few months. Back in October the Mercury News reported that Google's 3Q earnings were slightly better than analysts expected, prompting a jump in the stock price.

But the story goes on to note that Google will be significantly reducing the number of contractors they use on a day to day basis to reduce operating costs.

As a company, Google employs about 20,000 people on a full-time basis. That means they provide health insurance, benefits, etc. But there are about another 10,000 people that the company calls "workers" who don't receive the same treatment as the full-time employees, even though these workers are employed full time by the company.

As far back as October, Google's chief financial officer, Patrick Pichette, said that the number of those contractors would be reduced in order to help the company reduce costs.

What's surprising, then, is that those rumors have started to resurface around the Web. A story on WebGuild notes that employees have been getting laid off by the company since August. The story, written by Daya Baran, posits that Google has hired these 10,000 workers in order to finesse the numbers they report to the SEC. Instead of reporting that some of the workforce of 20,000 employees is getting laid off, Google can let go the contract workers without having to report it. Because those workers aren't part of the official headcount at Google, Wall Street sees 20,000 employees doing the work of 30,000 employees and thinks the company is using a highly efficient workforce.

An anonymous commenter on F**kedStartups also fanned the flames of a story that seemed to have run its course about a month ago.

Commenter Under Anne NondisclosureAgreement wrote on Nov. 22, "I can confirm that Google is in major lay-off mode since August. The new CIO received commands from management to cut unnecessary costs which he's taken to mean cut everyone except maybe 50 people to run all of Google's projects."

It's important to note that it's an unsolicited comment from an anonymous user, so take it for what it's worth. Under Anne also goes on to blast the managers and employees who have been laid off at Google, are people who "tak[e] 4 day weekends and showing up to work only to eat the free food and showed up barely to 1 or 2 meetings per week."

That's probably just sour grapes.

A Google spokesperson returned an e-mail and said the story was "old news," but declined to comment specifically on Google's personnel decisions.

But still, the story of Google laying off employees and struggling just like any other business in these hard economic times continues to show up on the Internet. Maybe the rose has lost a little bit of its bloom after all.

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