Google to cut contracting costs, not full-time employee headcount

By Jacqueline Emigh | Published November 25, 2008, 9:13 PM

Rumors of 10,000 upcoming job layoffs at Google are false, according to an informed source. Although Google does plan to significantly reduce its contracting expenses, some contractors may be converted into full-time employees.

Reports this week of 10,000 impending layoffs at Google were refuted Tuesday. But Google does intend to trim costs by cutting its contracting budget, a source familiar with the situation told BetaNews Tuesday evening.

Spawned by an article in Web Guild, rumors of the 10,000 supposed Google job cuts have taken on a life of their own, being cited as fact in reports by some financial analysts. In reality, the operational cost cuts will impact temps and other contractors rather than full-time employees, and the numbers of contractors to be affected won't come close to 10,000, the insider told BetaNews.

Some of the contractors might be turned into full-time employees, the source indicated.

Google's plans in these areas haven't changed since mid-October, when company co-founder Sergey Brin said in an interview with the San Jose Mercury News that Google's workforce currently included 20,123 full-time employees and 10,000 contractors.

Brin reportedly told reporter Elise Ackerman that Google is concerned about its high contracting expenses, and that it intends to reduce its number of contractors through "vendor management, converting some contractors to regular employees, and other approaches."

Unlike full-time employees, contract workers typically don't receive paid vacation and other benefits. But costs to companies can run high anyway, due to job agency fees and relatively pricey salaries, in some cases.

Brin's interview with the Mercury News took place just after Google's third-quarter conference call with financial analysts, when Brin and other Google officials said that Google will continue to contain operational costs over the coming quarters.

"Along the way, we are going to [keep] a very close eye on costs. It makes sense given everything we read in the papers and we have done that effectively in this quarter," said Eric Schmidt, Google's CEO, during the conference call.

"Operational efficiencies and cost containment have been in place for a couple of quarters already and they continue to [be]. So, we are adapting. We are very nimble and very agile in this," contended Patrick Pichette, Google's CFO, also during the call.

Pichette also said that Google's headcount of about 20,000 full-time employees includes about 500 new employees (net) added during the fourth quarter. About half of these new hires were in engineering, while some of the others were in sales and marketing, according to the CFO.