New York — Search engine giant Google Inc. has started to feel the chilling effects of the drooping economy, is in the process of axing down a contractor workforce that numbers about 10,000, the company confirmed Monday.
Behind the scenes Google has been cutting off workforce since August, and that number is expected to climb toward 10,000 according to WebGuild.
“Hundreds” of employees have been set free in the past few months, the company’s sources reported — and, they say, a loophole has allowed Google to keep quiet about the cutbacks. The contractor cut story made the rounds Monday after the release of a Silicon Valley WebGuild story with the alarming headline of “Google Layoffs — 10,000 Workers Affected.”
The tactic, WebGuild reports, all comes down to categories: Google classifies about 10,000 of its workers as “temporary operational expenses,” which means their positions are not official and could be eliminated without public notification. This is not a new concept; companies have been employing contractors and keeping them onboard long term for ages, all the while without giving them any benefits that employees are entitled to.
“Google officially reports having just over 20,000 full-fledged employees on staff. The additional 10,000, “temporary” positions speculated would bring the actual total to 30,000.”
“Google has hundreds of lawyers figuring out how not to get caught,” WebGuild President Daya Baran suggests. “One of them is by moving workers from job to job every few months so that their status remains temporary. That is why you probably have never spoken to the same person twice at Google and that is also why there is somebody new on the job and most times you know more about their job than they do,” he says.
Google co-founder Sergey Brin, in an article published in October issue of San Jose Mercury News, revealed the 10,000 number and said, “It is really high.” According to the story, “He said Google began looking at the number six months ago and has a plan to significantly reduce that number through vendor management, converting some contractors to regular employees, and other approaches.”
Google spokeswoman Jane Penner did not share too many details Monday, such as how many contractors are affected, whether contracts are being canceled or just not renewed, how many contractors Google will hire, and over what time frame the changes will take place.
“We have 10,000, and we have had a plan in place for awhile to significantly reduce that number,” she said. “This is something we have been thinking about for awhile — six or seven months. It predates the most acute phase of the (present economic) crisis.”
Google’s income and earnings were up in the third quarter — a rarity in Silicon Valley this season that could be seen as an indication the rumors may not hold much merit. Still, if one is searching for signs of possible scaling back, such indications can be found.
Google has slowed down the hiring process and reportedly had 20,123 of its own employees at the end of September. The company has been working to increase revenue from YouTube and other properties, and has closedown projects such as the Lively virtual world and SearchMash experimental search site, which “has gone the way of the dinosaur” according to the page.
Layoffs are of course spreading across the world and are imminent, including at direct Google competitors such as Yahoo, but Google gets more attention than most. For one thing, Google is a high-profile company with lavish benefits such as “20 percent time” in which engineers can work on projects of their own choosing. For another, the company has been relatively bullish about the extent to which its primary source of revenue, search advertising, is recession-proof.
The search company is swapping its traditionally lavish holiday bashes for more subdued and small-scale celebrations this year, reports released just before the weekend suggest. Known for its jam-packed parties complete with giant ice sculptures and virtual reality entertainment, Google this year has opted to go for “more economical” activities, such as group volunteering outings followed by casual dinner parties, sources have indicated.