Report: Google to Cut Back on Contract Workers

In a move that some say show’s the Internet ad and search leader’s vulnerability during a global economic slowdown, Google (News - Alert) Inc. reportedly is “significantly” reducing the number of contract workers it uses.

 

According to Reuters (News - Alert), company spokeswoman Jane Penner told The Wall Street Journal that Google has no plans right now to lay off its full-time employees.

 

“We have been thinking for some time, before the acute phase of the economic crisis, about significantly reducing the number of contract workers,” Penner reportedly told the paper.

 

Penner didn’t say how many contract workers may be cut, according to the paper. Google employs about 20,000 of its own workers and 10,000 contract employees, The Wall Street Journal reportedly said.

 

Google officials could not be reached immediately for comment by TMCnet.

 

According to Rhys Blakely, a business writer for the online version of London newspaper The Times, Google’s staffing costs and salaries have been like an anchor on the company’s share price even as earnings there soared.

 

“Sergey Brin, the billionaire co-founder of Google, recently signalled that contractor cuts were likely when he told the San Jose Mercury News that contractor expenses were ‘really high,’ ” Blakely reports.

 

The reports of Google’s cutting back on contracts come as the company announces that it’s pulling out of virtual world business.

 

Despite predictions that 33 million users will register for virtual worlds by 2013, drawing a wide variety of providers and companies to the relatively new technology, officials at Google say their virtual reality service, called “Lively,” will be shut down at the end of this year.

 

“It has been a tough decision, but we want to ensure that we prioritize our resources and focus more on our core search, ads and apps business,” the so-called “Lively Team” said on the company’s blog. “Lively.com will be discontinued at the end of December, and everyone who has worked on the project will then move on to other teams.”

 

According to The Associated Press, Google’s decision to kill Lively reflects the service’s inability to stand out in a virtual reality market dominated by Second Life.

 

For Blakely, Google also may be looking to cut its contract staff now because the financial crisis is starting to take its toll on online advertising.

 

“Silicon Valley has already suffered a slew of job cuts,” Blakely said. “More than 140,000 jobs have been lost there in the past few months, according to Challenger, Gray and Christmas, the consultants, as the axe has fallen at tech industry stalwarts including Hewlett Packard, Sun Microsystems (News - Alert) and Yahoo.”